CR Prasad, Former CMD of GAIL feels power plants are still keen to get gas supply in the reverse auction by the government, which is in turn working to solve the problems of these gas-based plants.
Prasad is hopeful that the auction will be successful even as the government is considering withdrawing the auction due to low competition,
On the absence of liquefied natural gas (LNG) terminals and subsequent shortages faced in the eastern coast, Prasad points out that three new LNG terminals are under construction.
Below is the verbatim transcript of CR Prasad's interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18.
Reema: We understand that the reverse auction which is conducted for Rs 1,600 crore subsidies was cancelled on day two because now negative subsidy bids were submitted. Could you walk us through what the demand and supply picture is and what it mean for gas companies?
A: At the outset I would like to say this government is working very well particularly on natural gas. As a matter of fact, this century is a century of natural gas. We have problems about natural gas in the past, about the availability and even today there is a deficit of 100 million cubic meter per day gas is required for the country. So the recent policy issued by the government, I want to congratulate them that this is one issue which is waiting for long time and now they have opened.
Latha: At what price of liquefied natural gas (LNG) will it be profitable? Will you find gas based power companies being able to run profitably? At the moment the benefit is not coming because the Western coastal gas power plant are able to find gas landed at Petronet cheaper. So do you think a further fall in gas prices will mean that gas companies do not want to buy expensive auctioned gas from the government?
A: I think that is not the way. Today, LNG prices have come down globally. We have been in the range of USD 15 per bbl to USD 20 per bbl some time back and now it has come in the range of USD 6-7-8 per bbl. The stranded power plant in the country, 24,000 megawatt, they have spent a lot of their own money, the bankers and so this needs to be put into operation. First two rounds was a success. The government has worked very well, some of the power plant have come on, they have generated power, they have supplied. They are quite keen on third round and it is a question of time, the government and industry, the promoters, the power plant owners, they are working very close. So I am not very pessimistic about this.
For entire interview, watch accompanying video.
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