Government drags feet on Oman proposal to swap coal for gas

Government drags feet on Oman proposal to swap coal for gas

Failure to respond in time may result in India missing out on a long-term agreement of a coal-for-gas swap deal offered by the government of Oman.

Gas-starved India had received an offer from the government of Oman for gas in exchange for coal as reported by Mint on 23 August. “There has been no response from our side to the proposal by the Oman government for coal and gas swap. Though the proposal was received by the Indian government in July, we are yet to send in a response. Any delay would jeopardize the deal. In such a gas supply situation, we need to respond first," a senior government official associated with the process, who did not wish to be named, said.

The government of Oman, according to senior officials who did not wish to be identified, has, however, not indicated any deadline to India.

India’s demand for gas is currently 179.17 million standard cubic metres per day (mscmd), while supply lags at 80.54mscmd. Worldwide, long-term gas supplies have already been tied up.

Growing economies such as India and China are engaged in a race to secure long-term energy supplies. India has a current power generation capacity of 130,000 megawatt (MW) and the country expects to add power generation capacity of 78,577MW by 2012. Of the new capacity being planned, around 4,289MW will come from projects using gas as fuel.

Gas-based power generation projects in India have been put on hold due to unavailability of gas here. A case in point being NTPC Ltd, the country’s largest power generation company. NTPC has a power generation capacity of 27,404MW of which 4,695MW capacity (both company-owned and under joint venture) is fuelled by gas or liquid fuel.

This capacity is running below efficiency for want of gas. In fact, the non-availability of gas had delayed the company’s plans to enhance capacity by 1,450MW in the 10th Plan (2002-07). Oman wants Indian coal due to its high-ash content for the manufacture of cement; largely to meet the growing demand in construction. In return, it has agreed to supply natural gas.

India wants 5mscmd or 1.25 million tonnes (mt) of gas a year for every 4.5mt of coal it exports in a year. That volume of gas will be adequate to generate 2,000MW of power.