OREANDA-NEWS. April 5, 2011. State-owned gas utility GAIL India Ltd plans to foray into power sector through a tie-up with the nation’s largest electricity generating company NTPC Ltd.“We are in talks with NTPC and we hope to sign a MoU for cooperation in power sector shortly,” a GAIL official said here today requesting anonymity.

The two firms plan to set up a joint venture for building gas-based power plants in India and in other countries. NTPC would also explore the possibility of giving GAIL equity in its upcoming and expansion power projects, he said. The two firms are already partners in Ratnagiri Gas and Power Pvt Ltd (RGPPL), the firm that runs the Dabhol power plant in Maharasthra.

Through the MoU, GAIL and NTPC would cooperate in commissioning of the 5 million tonnes a year LNG receipt and regassification terminal adjacent to the Dabhol power plant. “We will also explore the feasibility of expanding the LNG terminal capacity as well as the power block,” he said.

GAIL and NTPC hold 30.17 per cent equity stake each in RGPPL. The remaining equity in the 1,967-MW power plant is with the Maharasthra State Electricity Board (MSEB) and financial institutions. Also on the radar are two companies jointly pursuing oil and gas exploration and production opportunities and venturing into various elements of natural gas/LNG value chain in potential countries.

For NTPC, efforts would be made for supply of additional gas to its existing power plants and supply of LNG to its proposed units. “NTPC will also give us additional leverage in negotiating with potential LNG suppliers,” the official said. The MoU shall remain valid for a period of three years from the date of signing and can be extended further through mutual consent of both the companies.