• Co. may start two gas plants idled for 3 years within 6 months
  • Spot price for LNG to Asia has plunged 66% since Sept. 2014

Essar Power Ltd. is seeking liquefied natural gas to supply two power plants in western India after a global glut cut prices for the fuel by two-thirds since September 2014.

The company is in discussions with suppliers including Royal Dutch Shell Plc and state-run GAIL India Ltd. to supply the two plants in the western state of Gujarat, according to Executive Vice Chairman Sushil Kumar Maroo. The 515-megawatt Hazira facility and the 500-megawatt Bhander plant may resume operations within six months, Maroo said.

India gas plants.
India gas plants.

Restarting the plants that were idled more than three years ago as the price of the super-cooled fuel skyrocketed and as domestic gas supplies dried up is crucial for Essar Power, which is targeting a return to profit in the year ending March. The company, a unit of London-based Essar Energy Ltd., said last month it was considering selling some assets to help reduce more than 200 billion rupees ($3 billion) of debt.

“The scenario is changing because LNG is becoming cheaper,” Maroo said Friday in an interview in Mumbai. “Based on fundamental reasons, we feel LNG will remain affordable in the next 5-8 years.”

Producing power from the Gujarat plants would be viable if gas is available at the burner tip at about $5.5 per million British thermal units, Maroo said. The price for spot LNG to Asia was at $4.808 per mmBtu as of Monday, down 66 percent since September 2014, according to an assessment by Singapore Exchange Ltd.

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