MC EXCLUSIVE Indian Oil to supply LNG to NTPC’s upcoming 50 MW power plant in Andaman & Nicobar

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26 Aug, 2025 12:21

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State-run Indian Oil Corporation (IOC) would supply liquefied natural gas (LNG) to Andaman & Nicobar Islands’ first gas-based power plant, to be set up by state-owned NTPC, the oil marketing company told Moneycontrol.

“Indian Oil is working with stakeholders to develop LNG infrastructure for NTPC’s proposed power plants in South Andaman and Great Nicobar. With established presence in the region, IOCL is well positioned to support this initiative,” a company official said.

NTPC, India’s largest power producer, is setting up a 50 megawatt (MW) gas-based power plant in Andaman & Nicobar, for which Prime Minister Modi had laid the foundation stone in December 2018.

Currently, NTPC is in the process of acquiring land in Andaman & Nicobar Islands for the proposed power plant expected to be commissioned by 2027-28, one government official told Moneycontrol on condition of anonymity.

“The company (NTPC) is looking for land currently. It is in talks with the concerned (government) organisations. The plant is expected to be commissioned by 2027-28,” the official said.

Queries sent to NTPC remain unanswered at the time of publishing of this story.

The Andaman & Nicobar Islands are entirely powered by diesel, and a gas-based power plant would be a move towards India’s larger goal of energy sustainability. The government aims to increase the share of natural gas in the country’s energy basket to 15 percent by 2030, from current 6 percent.

“The new gas-based power plant will replace diesel use for power generation in the main island, supporting cleaner energy goals. IOCL will continue to meet diesel needs elsewhere in the islands. IOCL will continue fulfilling HSD (high speed diesel) requirements across the islands during this transition,” said Indian Oil.

The company added that it has adequate LNG supply for the proposed gas-based power plant as Indian Oil has strengthened its portfolio through long-term international tie-ups.

Indian Oil operations in Andaman & Nicobar

Indian Oil is the sole provider of petroleum products including diesel, petrol, LSHF HSD (low sulphur high flash high speed diesel - a grade of diesel used by Indian Navy ships, aviation turbine fuel (ATF) and liquefied petroleum gas (LPG) in Andaman & Nicobar Islands. Other state-run OMCs including Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) do not have operations in the area.

The fuel consumption in the island has been rising over the last five years and is expected to grow further, according to Indian Oil statistics.

Also Read: Indian Oil to set up new POL terminal at Andaman & Nicobar amid rising fuel demand

Diesel is the most-consumed petroleum product on the island, used for generating electricity, and saw a year-on-year demand growth of 1.41 percent in 2024-25, with consumption rising to 1.43 lakh KL during the last fiscal. Andaman & Nicobar’s electricity accounts for approximately 70 percent of the terminal’s diesel volumes.

Petrol and LSHF HSD demand grew by 6 percent and 24 percent, respectively, while ATF demand fell by 5.43 percent in FY25 from the previous year.

IOC also has an LPG bottling plant on the island with a capacity of 15 thousand metric tonne per annum (TMTPA). LPG consumption grew by 3 percent year-on-year in FY25 at 12,731 metric tonnes (MT), showed Indian Oil data.