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GAIL to enter power generation business

GAIL to enter power generation business

New Delhi: State-run GAIL (India) Ltd, the country’s largest gas transporter, plans to enter the electricity business by building power plants along its sprawling gas pipeline network.

“We are examining the option of setting distributed power generation projects on our pipeline routes," said chairman and managing director B.C. Tripathi. “We already have land at our (gas pumping) stations available for this use. We are studying the plan and examining all possibilities."

Tripathi did not give further details.

In India and most parts of the world, power is typically distributed through a centralized network, or grid. Power utilities feed electricity to the grid, which is then delivered to buyers. Sometimes, a so-called distributed approach is also used, in which power is generated and supplied locally, without linking to a grid.

GAIL owns and operates a natural gas pipeline network of nearly 7,200km with a transportation capacity of 155 million standard cu. m per day (mscmd).

As the proposed power projects will run on gas rather than coal, it will be easier to turn them off on short notice.

They would help address India’s power shortage during peak consumption hours, between 5pm and 11pm, which is pegged at 12%.

Some experts said the proposed projects may be hindered by a gas shortage in the country. Against a demand of around 190 mscmd of gas, supply is around 167 mscmd.

India has recoverable natural gas reserves of 119.55 billion cu. m and produced 32,847 million cu. m in 2008-09. According to a recently released McKinsey and Co. report, India’s gas demand is expected to touch 320 mscmd by 2015.

“There are various views on the availability of gas in the country. Some experts believe that there will be a surplus while others state there will be a shortage," said Kalpana Jain, senior director at consulting and financial advisory firm Deloitte Touche Tohmatsu. “Also, for new generation capacity to come in, the developer will have to get the gas allocated through the (government’s) allocation policy which is in place."

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