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NEW DELHI, March 7

THE BG group, one of cheapest producers of liquefied natural gas (LNG) in the world market, is eyeing supply of three million tonnes per annum of LNG to National Thermal Power Corporation's (NTPC) four proposed power projects in Western India, aggregating a capacity of 2,600 MW.

NTPC is planning to seek price bids for the four 650 MW-each projects sometime next month.

``We are the lowest-cost operator of LNG in the world. Our upcoming greenfield LNG liquefaction plant in Iran can supply gas to energy-deficit India at the lowest cost,'' the Chief Executive, Mr Frank Chapman, told newspersons.

BG is in the process of setting up a 2.5 million tonne per annum (mmtpa) LNG receiving terminal in Pipavav, Gujarat.

Donning the role of a `reform driver' for the LNG industry, he and his board have lobbied with the Government to seek a reduction in taxation on LNG.

"Ultimately, there has to be a optimal mix between various fuel sources in the country, LNG, domestic natural gas, coal, etc."

The team has sought fiscal incentives such as infrastructure status for LNG projects, zero import duty and uniform sales tax rate of four per cent on LNG.

This would bring down the prevailing market price of LNG from $3.45 per million British thermal units (mbtu) to around $3 per mbtu.

This reduction in LNG prices would reduce the fuel cost for power stations from Rs 1.70 per unit to around Rs 1.20 per unit. Currently, domestic gas produced is sold at an artificially suppressed price, translating into a fuel cost of around Rs 90 paise per unit.

BG is planning to secure an anchor load or an assured credible buyer for its Iranian LNG in the European markets.

Depending on its success in securing supply to NTPC's power projects and other such bulk consumers, it will develop the Pipavav project, which can be expanded to an ultimate capacity of five mmtpa.

He has also sought hastening of the passage of the Gas Act, which will enable implementation of `open access' mechanism.

This will enable Gas Authority of India Ltd (GAIL), the State-owned gas transporter, to allow BG to use its pipelines to transport gas to its consumers across the country on a non-discriminatory basis.

"We are holding back production of one million standard cubic metres of day of gas in the Panna Mukta Tapti fields, awaiting this policy move," Mr Chapman said.

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