Fall in KG output may turn 40k crore investment into NPAs - The Economic Times
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Fall in KG output may turn 40k crore investment into NPAs
By Rajeev Deshpande, TNN | 27 Jul, 2013, 06.44AM IST
Post a Com m ent
NEW DELHI: Rs 40,000 crore of investments in power plants with an installed capacity of 4,904 MW are at risk of turning into non-performing assets due to non-availability of domestic natural gas, primarily due to low production at the Reliance-run KG offshore fields. The government has told Parliament's finance standing committee that with supply to the power sector from the KG D6 field becoming zero since March this year, "... significant gas-based power capacity got stranded or (is) operating at sub-optimal level" . The committee on Friday adopted a report urging the government to rethink its recent decision to sharply hike gas prices while noting the oil ministry's dire warning that "... an investment if Rs 40,000 crore is at risk of becoming non-performing assets due to non-availability of indigenous natural gas" . The petroleum and natural gas ministry told the panel that against a requirement of 72 mmscmd (million metric standard cubic metres per day) of gas needed to run power plants as 70-75 % of plant load factors, the actual supply was a mere 27 mmscmd. Similarly, the steel ministry said that "due to fall in production of KG D6 gas, steel sector is getting zero supply" and "due to non-availability of natural gas to existing units, there is under-utilization of already created capacity of over 10 million tonnes a year" . The committee, headed by BJP leader Yashwant Sinha, has said Reliance be made to make good shortfall in gas production at the old price of $4.2 mmbtu rather than benefitting from revised rates. A curtailment of gas supplies to steel plants run by Essar Steel, JSW Ispat and Welspun Maxsteel will affect the financial viability of these units...
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