No Gas Supply in Sight for Sravanthi Energy's Kashipur Projects

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Researched by Industrial Info Resources India (Delhi, India)--Sravanthi Energy Private Limited (SEPL) (Gurgaon, Haryana) is unlikely to obtain gas supply for its projects in Uttarakhand anytime soon, as India's Ministry of Power (MoP) recently declined a request from the state government for allocation of 6 million standard cubic meters per day (MMscmd) of gas to two upcoming gas-based power projects at Kashipur and Haridwar in the state, citing constrained domestic gas supply as the reason.

MoP's dissonance on supplying gas to power projects in the state raises concern about the fate of Sravanthi Energy's power projects at Kashipur, which are already idled due to delay in the commencement of gas supply. The company has almost completed construction on two 450-megawatt (MW) combined-cycle power plants, but it could not initiate final testing and commissioning due to non-availability of gas. Gas supply to these projects could not commence due to drastic fall in the production from the KG-D6 fields.

Notably, the gas output from Reliance Industries Limited's (BSE:500325) (Mumbai, India) KG-D6 field has fallen since reaching a peak of 61.5 MMscmd in March 2010. Production from Dhirubhai-1 and 3, the largest among the 19 oil and gas discoveries Reliance Industries has made in the KG-DWN-98/3 or KG-D6 block, slipped to 26.51 MMscmd during the first week of May 2012.

The company had firmed up an ambitious plan to develop 930 MW of gas-fired power projects by the end of 2014. Apart from its Uttarakhand project, the company has proposed to develop another 480-MW of gas-fired capacity in Andhra Pradesh.

SEPL is a special-purpose vehicle promoted by the Sravanthi Group for the development of merchant power plants in India. SEPL has entered into a long-term gas supply agreement with state-run gas suppliers GAIL and Oil & Natural Gas Corporation (BSE:500312) (ONGC) (New Delhi) to source the feedstock for its gas-fired power plants. The power generated by the project will be evacuated through the transmission system of state-run Power Transmission Corporation of Uttaranchal Limited (Dehradun, Uttarakhand).

Sravanthi Group is an integrated power sector developer and operator. SEPL has set a target to increase its generation portfolio to 5,000 MW by 2015, through the development of thermal, gas, hydro and wind energy-based projects. The group also has an independent entity for undertaking engineering, procurement and construction activities for third-party power projects.

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