//Qatar promises investments in Kerala

Qatar promises investments in Kerala

Saturday, 2 September, 2006,

By Ashraf Padanna

THIRUVANANTHAPURAM: Qatar has agreed to pump in money and gas into India's National Thermal Power Corp, media reports said.

Qatar plans to enter into a joint venture with the thermal power major for the expansion of the 350-MW Kayamkulam gas-fuelled power project in Kerala by 1,950 MW, the Business Standard said.

Qatar will also ensure an assured supply of LPG for the project. "We want a strategic partner who can supply LNG to us to run the project on a long-term basis.

The Qatar Investment Board has given an investment proposal and is keen on supplying LNG to India. It makes sense for us as Qatar is also geographically closer," a government official told the newspaper.

The expansion project involves a total investment of Rs 60bn, of which the company is looking for a substantial amount from Qatar.

"The negotiations with the Qatar government are in the initial stages," a company executive was quoted as saying. The plant is currently running below capacity due to constraints in fuel supply. It sells power at around five rupees per unit to meet the peak power demands of Kerala and Tamil Nadu.

Of the 12,600-MW installed capacity of gas-based power plants in the country, NTPC has got seven power generation plants fuelled by gas or liquid fuel with a commissioned capacity of 3,955 MW.

The government has recently asked public sector companies to identify projects for attracting investments from the GCC countries.

The Power Ministry directed the NTPC and National Hydroelectric Power Corp as well as transmission monolith Power Grid Corp of India Ltd to set up task forces and finalize projects for cooperation with West Asian countries.

All the three PSUs were told to approach these countries to set up joint ventures for specified projects in generation and transmission sectors.

As the scope of equity participation was limited, the companies have also been asked to explore the area of debt funding from Gulf nations.

The Ministry of External Affairs and respective embassies would be approaching these countries shortly, according to the officials. Besides the Kayamkulam plant, India is wooing the Gulf countries to cooperate in other plants including NTPC's 2,000 MW Pipapav project, NHPC's 1,600 MW Subansiri and 3000 MW Debang hydropower project in Arunachal Pradesh and the 1,020 MW Khab hydropower project of Satluj Jal Vidyut Nigam.

Supplies from countries like Saudi Arabia, Kuwait, Oman and Qatar meet more than 67% of India's oil and gas needs and the government is looking for long-term agreements to purchase crude oil and gas.

According to reports, the government has chalked out plans to increase the foreign direct investment (FDI) inflows from the Gulf countries from the current 1.59% of the total FDI approvals in India since August 1991 to a substantial level.

The ministry of power is ready to offer equity participation of up to 40% in the projects identified for investors from West Asia.

At present, Qatar's RasGas has a small equity holding in Petronet LNG's gas terminal at Dahej.

The NIOC of Iran holds 15.04% in Chennai Petroleum and Oman Oil Company has made an investment of Rs 755mn in Bharat Oman Refineries, a joint venture company promoted by Bharath Petroleum Corp Limited.

Oil and Natural Gas Corp is currently in talks with Iraqi oil companies for a long term crude oil contract.

It has invested close to Rs 9.82bn in acquiring oil producing assets in Syria and has offered equity participation to Syrian companies in its refinery expansion.

Participation in refinery projects against long term crude oil sourcing contracts has also been offered to companies in Saudi Arabia, Qatar, UAE, Yemen, Kuwait and Oman.