The Dabhol power plant today started buying natural gas from Reliance Industries to cut electricity generation cost at the country's largest gas-fired unit

“We started drawing (RIL’s) KG-D6 gas from today. The volumes were around 4.5 million standard cubic meters per day,” said A K Ahuja, Managing Director of Ratnagiri Gas and Power Pvt Ltd, the company that runs the 2,150 MW power plant and adjoining LNG receipt facility in Maharasthra.

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The government had this month more than doubled RGPPL’s allocation from KG-D6 to 5.67 million standard cubic meters per day that will help generate about 1,000 MW of electricity.

“We are currently operating three gas turbines producing 920-930 megawatt of electricity. We will add another 320 MW turbine by November-end, when the drawal would increase to 5.6 mmscmd,” he said.

RGPPL was initially allocated 2.7 mmscmd of gas for the period between April and September but the company had not drawn even a single unit as it had a running contract with Petronet LNG Ltd to buy imported liquefied natural gas.

It paid a burner-tip price of $7.8 per million British thermal unit for the regassified-LNG sourced from Petronet.

“The delivered price of KG-D6 gas would be $6.2 per mmBtu,” Ahuja said adding the cost of electricity generation will come down to about Rs 4 per unit from Rs 4.70 earlier.

Ahuja said RGPPL would add one more turbine by end December or early January and the last one by end March, when the drawals from KG-D6 would rise to 8.4 mmscmd.

RGPPL was currently generating electricity from three units and by the year end two more units would be made operational that would require an additional 1.6 mmscmd of gas from RIL’s KG-D6 fields.

“By March we expect all the units to be operational and that is when we would be able to start drawing our full entitlement of 8.4 mmscmd KG-D6 gas,” he said.

RGPPL —- co-owned by state power utility NTPC and gas firm GAIL India — was among the three firms which were yet to draw on even a single unit of KG-D6 gas allocation.

The others are NTPC, which recently signed a Gas Sales Purchase Agreement for less than one-fourth of its entitlement of 2.67 mmscmd, And Essar Power that is negotiating a transportation agreement.

RGPPL did not take KG-D6 gas previously as it had a ‘take-or-pay’ contract with Petronet for supply of gas.

RIL can produce 60 mmscmd of gas from KG-D6 fields but is restricting output to around 40 mmscmd in absence of offtake from existing customers like NTPC and failure of the government to name consumers beyond the initial 40 mmscmd.