NTPC Plans to Develop Coal-Fired Power Plants in Oman in Return for LNG Supply Security

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Researched by Industrial Info Resources (Sugar Land, Texas)--National Thermal Power Corporation (NTPC) (New Delhi) is looking to forge a relationship with firms in Oman with the hope of securing fuels to feed its domestic power plants. In return, it would exercise its power generation expertise to develop coal-based power projects in the country. NTPC has approached Al Hassan Engineering Company SAOG (Muscat, Oman), Bahwan Engineering Company LLC (Ruwi, Oman), and the Zubair Corporation LLC (Ruwi) with the proposal.

NTPC is looking to secure supplies for seven power plants with a total generating capacity of 3,955 megawatts (MW). All of the plants, which operate on gas or liquid fuel, have a low capacity utilization of 60% to 65%, compared with the global average of 80% to 90% for similar power plants. NTPC requires 17 million cubic meters per day of liquefied natural gas (LNG) but currently has access to only 10.5 million cubic meters per day of LNG. It is resorting to naphtha as an alternative. The firm is looking to tap into Oman's proven gas reserves of 805 billion cubic meters.

The Omani companies would have access to the expertise of NTPC, one of Asia's largest power-generation utilities, in setting up coal-based power generation plants. More than 80% of NTPC's installed capacity of 29,344 MW is based on coal feed. In July, Oman's government decided to develop coal-based power plants with a generation capacity of 1,000 MW to 1,200 MW in the upcoming industrial port city of Duqum. The Oman Power and Water Procurement Company (OPWPC) is expected to release tenders and invite proposals through an international competitive bidding process for the proposed project by early 2009.

Earlier this year, NTPC announced plans to invest nearly $40 billion over the next five years in diversification and globalization initiatives. The company, in collaboration with the Ceylon Electricity Board (CEB), is setting up a 500-MW coal-fired power plant in Sampur in Trincomalee, Sri Lanka, at a cost of $500 million. It has been pursuing opportunities in Nigeria to secure gas supplies of 3 million tons per year. In return, NTPC was to construct a 500-MW coal-fired power plant and a 700-MW gas-based power plant in Nigeria, and also build a 200-MW unit in Egbin. Sourcing LNG from Nigeria was estimated to require an investment of $1.7 billion to develop an LNG liquefaction terminal in Nigeria, build a regasification terminal in India, as well as to cover transportation costs. NTPC has also been eyeing stakes in coal mines in Indonesia, Mozambique and South Africa to bridge its shortfall of 10 million to 12 million tons of coal per year.

India and Oman share cultural, historical and geographical ties. Evidence of trade between the nations dates back to the period of the Indus Valley civilization. With its strategic coastal location, Oman has always occupied a place of importance on the trade route. Oman and India signed the Treaty of Friendship, Commerce and Navigation in 1953, and the Agreement for Economic Trade and Technical Cooperation in 1993. Trade between the countries has been growing steadily over the years, and India is now the fifth largest exporter to Oman. Indian exports to Oman include chemicals, electrical and electronic items, iron and steel products, machinery and equipment, textiles and garments, and conventional products such as coffee, tea, fruits and vegetables, rice and meat products, and spices. Oman is also known to import products of leading Indian brands, such as buses and trucks from Tata, television sets and white goods from BPL, Onida and Videocon, and consumer goods form Amul, Godrej and Unilever. India imports copper, dates, and metal scrap from Oman. Non-oil bilateral trade between the two countries is reportedly poised to top $2 billion in 2008.

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