Indian utilities to supply NVVN gas-based power with LNG priced around $8.50/MMBtu

Indian utilities will supply gas-based power in a state-owned NTPC Vidyut Vyapar Nigam tender using LNG at a price of $8.50/MMBtu for March 16-April 15, sources told S&P Global Commodity Insights March 7.

Torrent Power will supply 770 MW in the NVVN tender with a minimum offtake of 388 million units. The actual offtake would depend on demand in the summer period of March 16-June 30, according to a release by Torrent Power March 1.

Platts assessed March 1 the West India LNG Marker for cargoes delivered to western ports at $7.975/MMBtu for second-half March and first-half April delivery, S&P Global Commodity Insights data showed.

The price of $8.50/MMBtu is as per communication by state-owned gas company GAIL for March 16-April 15, market sources said. Traders said the price references LNG cargoes delivered to India.

In an amended formula for charges linked to gas prices, NVVN had said that variable charges linked to gas prices, or VCGA, shall be indexed to the monthly gas price, which is communicated by GAIL based on the Platts WIM, if a power supplier is itself arranging gas.

However, if the gas is being procured by one or more power suppliers from GAIL, then the latter will indicate a price to NVVN based on the level offered by GAIL, the document had said.

Torrent Power in January had purchased LNG cargoes in anticipation of a rise in demand during summer.

Apart from Torrent, other companies that offered supply of gas-based power included Lanco Kondapalli Power and Gama Infaprop, market sources said.

Torrent will supply power through gas it has secured on its own, whereas the other companies would supply based on gas procured from GAIL, a source familiar with the matter said.

Torrent had bought two spot LNG cargoes for April and one cargo for March on a fixed-price basis in a range of $8.90-$9.20/MMBtu, market sources said.

If 770 MW was considered for power supply, it would require gas of around 2.5 million Scm/d, which would translate to around one cargo per month, sources said.

Platts assessed the West India Marker for April at $8.688/MMBtu March 6, according to data by S&P Global.