New Delhi: The Egyptian government has invited India’s NTPC Ltd to set up power projects in the African nation in an attempt to meet an expected surge in electricity demand. According to the proposal from the African country, the government will provide the land for the projects and pledge the long-term purchase of power with its central bank guaranteeing transactions.
NTPC is willing to set up the projects provided it is allowed to source gas for its domestic capacity which is running at low efficiency due to a fuel shortage. Egypt has proven gas reserves of 2,170 billion cu. m (bcm) of gas or 1.2% of the total gas reserves in the world.
“Egypt is self-sufficient in power and electricity. We are sufficiently covered till 2010,” said Mohamed Higazy, Egypt’s ambassador to India. “In 2011, keeping in mind the increasing demand and the expected shortage we are calling Indian companies to contribute in power generation.”
While he declined to name the firms, he confirmed that NTPC was among the Indian companies that had shown interest in the proposal.
“We have seen a lot of interest from the Indian firms,” Higazy added. “They will come and visit us soon.”
NTPC, India’s largest power generation utility, has so far been unsuccessful in securing gas supplies from Nigeria and Yemen where it had proposed building power projects in return for liquefied natural gas (LNG). Mint had reported on 21 December about NTPC’s proposal for building a power project in Ghana in return for LNG.
While R.S. Sharma, chairman and managing director, NTPC, did not respond to repeated phone calls, a senior NTPC executive who did not want to be named confirmed that some “very preliminary” discussions had taken place.
“The proposal makes sense if the Egyptian government gives us gas to bring to India to fuel our own capacity,” he said.
While Egypt is the sixth largest LNG producer in the world, NTPC has a total gas requirement of 16 million standard cu. m per day and sources some of its requirement through the spot markets because supplies through long-term contracts are not available on account of global demand for gas exceeding supply.
“Demand for natural gas depends primarily on its competitiveness relative to other fuels, as well as the price absorption capacity of its primary users,” said Monish Chatrath, executive director at consultancy firm Mazars India. “In India, despite the increasing private investments in this sector, recent discoveries of domestic natural gas reserves and improvements in the transmission network, the demand for gas continues to outstrip its supply.”
The two countries will need to work in close cooperation to ensure that the initiative succeeds.
“The key to ensuring that such initiatives meet with the desired levels of success also lies in the extent of the bilateral understanding and cohesive support of the respective governments,” Chatrath said. “To help bridge this gap, some public and private sector companies are pursuing gas importation options, with NTPC actively pursuing various options in neighbouring nations that have proven gas reserves.”