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NTPC gets 10 bids for LNG supply
NTPC chief C.P. Jain in New Delhi on Thursday.

New Delhi, Sept. 25: National Thermal Power Corporation has received 10 bids for the supply of liquefied natural gas (LNG), the fuel used to generate electricity at its Kayankulam power project in Kerala.

The power generating company has reiterated that LNG suppliers will have to accept the development guarantee scheme and the pricing mechanism developed by NTPC. The company has proposed a 20-year contract for the supply of LNG on a pricing mechanism that is protected from any change in international oil/gas prices.

It has rejected the pricing mechanism based on the international oil/gas price. NTPC has also said that any supply of LNG at a price of more than $3 per million metric British Thermal Unit (BTU) is not viable for power generation.

“Our projects will not be sustainable on the international price mechanism for oil and gas. We are ready to sign a 20-year contract with a few variables in price,” said C. P. Jain, chairman and managing director of NTPC.

Commenting on the development guarantee, Jain said, “If we are building a $2-billion project we have asked for an earnest money guarantee of $4 million that too till the financial closure of the project. For service providers, it is only Rs 5 crore. Further, we have extended the default penalty clause for the suppliers which gives them the right to seek compensation if we do not start the project.”

He also pointed out that the international standards for supply of LNG from Qatar to the generating stations is $1.6 per million metric BTU while it is $1.8 per million metric BTU from CISF countries and $1.97 per million metric BTU from Yemen. The suppliers of LNG will still have to add up the cost of service and taxes and the cost for re-gasification and transportation which, according to NTPC, has to be less than $3 per million metric BTU.

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