2nd round of gas power revival gets bids from plants of 8k Mw

The bidding, held through a reverse e-auction process, is for the subsidy to buy costly imported gas - regasified liquefied natural gas

The second round of the revival plan for gas-based power plants received bids from plants with capacity of 8,262 megawatts (Mw). The bidding, held through a reverse e-auction process, was for the subsidy to buy costly imported gas - regasified liquefied natural gas (RLNG). This will involve government support of Rs 1,590 crore from the power system development fund, the subsidy disbursement fund for gas-based power plants.

The reverse bid was for the subsidy amount to come from the power system development fund to purchase RLNG. The eligible bidders indicated the total incremental electricity they would generate using the RLNG. The companies also quoted the subsidy they required to ensure the net purchase price for the power distribution companies to buy that power, without exceeding the target plant load factor. PLF is the ratio of the actual output of a power plant over a period and its output if it had operated at full capacity.

These plants would generate 11.03 billion units of electricity, which will be supplied at or below Rs 4.70 per unit to power distribution companies from October 1, 2015, to March 31, 2016. The companies in fray are NTPC, Lanco, and GMR, among others. The government did not release the names till the time of going for print.

In the first round of auctions, 14 gas-based power plants with capacity of 8,100 Mw had bid. The successful bidders included power plants mostly from the southern region.

"The generation from these plants would improve the power availability in the southern grid, mitgating to a large extent the shortage of availability and constraint of evacuating the power to the southern region from other regions," said a government official.

Under the new gas mechanism, every stakeholder in the supply chain would have to forego a part of their returns on operations. While the central government would give up the service tax it levies on gas sourcing, the power plant operators would forego return on equity.

The lead banker to these plants would ensure all receipts of money would be utilised only for payments towards the variable cost of generation (fuel cost) and the operation and maintenance expenses in accordance with regulatory guidelines. Debt servicing would be made after capping the fixed cost.

Of the 24,150 Mw of gas grid-connected power generation capacity in the country, 14,305 Mw has no supply of domestic gas. On this front, an investment of about Rs 60,000 crore is on the threshold of becoming a non-performing asset. The remaining capacity (9,845 Mw), involving an investment of about Rs 40,000 crore, is working at a sub-optimal level, based on the limited quantity of domestic gas in India.