India's NTPC to Augment Kayamkulam Power Plant to 2,300 Megawatts

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's leading public-sector power producer, NTPC Limited (BSE:532555) (New Delhi), will augment the power-generating capacity of the 350-megawatt (MW) combined-cycle power plant (CCPP) at Kayamkulam in Kerala to 2,300 MW. The stage-II expansion program will be executed over a three-year period. The existing 350-MW power station, located in the Choolatheruvu village near Kayamkulam, was built with financial assistance from World Bank (Washington, D.C.). The existing facility consists of two gas turbines of 115 MW each, and a steam turbine of 120 MW.

The feasibility study for the 1,950-MW, stage-II expansion program was completed in 2006. Land acquisition and water supply allocation clearances also have been obtained. NTPC is in talks with Petronet LNG Limited (BSE:532522) (New Delhi) for the supply of 2.1 million tons per year of gas for this project. Petronet LNG has indicated that it will be able to offer about 1.2 million tons per year of gas to NTPC immediately. Petronet LNG recently signed an agreement with Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) to procure 1.5 million tons per year of gas from the Gorgon gas fields in Australia over a 10-year period. Of this, Petronet LNG proposes to offer 1.2 million tons per year of gas to NTPC and the remainder to a fertilizer production facility and a refinery developed by Bharat Petroleum Corporation Limited (BSE:500547) (BPCL) (Mumbai) in Kerala.

NTPC presently operates seven gas-powered plants in the country. These facilities are located in Auraiya and Dadri in Uttar Pradesh; Jhanor and Kawas in Gujarat; Anta in Rajasthan; and Kayamkulam and Faridabad in Haryana. These plants require about 15 million to 16 million metric standard cubic meters per day of gas supplies. NTPC is facing a gas supply deficit of about 1 million to 2 million metric standard cubic meters per day, which has forced the power plants to operate at a plant load factor of about 80%.

The firm recently invited bids for supply of re-gasified liquefied natural gas for its gas-fired power plants. Reports indicate that BPCL, GAIL India Limited (BSE:532155) (New Delhi), and Indian Oil Corporation Limited (BSE:530965) (IOC) (Mumbai) will take part in the tendering process.

NTPC also has signed an agreement with GAIL to buy 2 million metric standard cubic meters per day of gas at $8 per British thermal unit over a 10-year period. Supply is expected to begin during the fourth quarter of this fiscal year. There have been reports of hostility between NTPC and Reliance Industries Limited (BSE:500325) (RIL) (Mumbai) regarding gas supplies from RIL's Krishna-Godavari gas fields for NTPC's power plants at Jhanor and Kawas in Gujarat.

NTPC also has indicated that it will seek to procure fuel supplies from the Panna-Mukta and Tapti fields. These fields, jointly managed by RIL, BG Group plc (OTC:BRGYY) (Berkshire, England), and Oil & Natural Gas Corporation Limited (BSE:500312) (Dehradun, Uttarakhand), are the oldest in India. The Panna and Mukta fields were yielding about 40,000 barrels per day of oil, while the Tapti fields produced 14 million metric standard cubic meters per day of gas. These fields, which are witnessing a slump in production, are expected to receive investments of about $550 million to boost output.

NTPC operates 23 power plants in India with a total installed power-generating capacity of about 30,000 MW. This accounts for 23% of the country's total installed capacity. NTPC plans to add 22,430 MW of power-generating capacity by the end of the ongoing 11th five-year plan period, 2007-12. As part of this plan, the company is augmenting the capacity of its plants in South India. In addition to the proposed expansion at Kayamkulam, NTPC plans to increase the capacity of its 1,000-MW Simhadri power plant in Andhra Pradesh to 2,000 MW. The company is also proposing to build a 1,000-MW power plant at Vallur in Tamil Nadu. By 2017, the total installed capacity of NTPC's power plants in South India is expected to reach 15,400 MW, from the present 5,950 MW.

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