Centre has riders for gas-based power plant incentive

Asks these power plants to seek financial relief from their lead lenders

The government’s new scheme for gas-based power plants might face a tough start with only those projects where the host state agrees to waive tax being able to take part.

Besides, the Centre has asked these power plants to seek “financial relief” from their lead lenders, in line with Reserve Bank of India guidelines. The lender relief is not mandatory but is intended to ensure they're able to meet debt service obligations. The state governments would be required to waive value added tax on natural gas quantities to be supplied through electronic bids under the scheme.

The government support from the Power System Development Fund (PSDF), however, would be made available only for the incremental Plant Load Factor (PLF) . There are two categories of power plants — those with stranded assets that generate nothing and those that receive domestic gas but are generating at a low PLF. The first category will be able get imported gas under this mechanism to maintain not more than 30 per cent of PLF. The second one can aim for higher PLF.

For instance, Tata Power’s Trombay project, with an installed capacity of 180 Mw, recorded a high PLF of 78.5 per cent during April 2014 to January 2015, and the Delhi government’s Pragati unit with 66.2 per cent PLF, can avail of the scheme only for loads higher than what they achieved during the period. The incremental generation and eligible power plants for e-bidding for regasified natural gas would be identified by the empowered pool management committee.

The eligible bidders will take part in a reverse e-auction. While doing so, they will have to indicate the total incremental electricity they will generate using the e-bidding of regasified LNG, and the support or subsidy required per unit under PSDF to ensure the net purchase price for distribution companies is not more than the target price for a PLF target set by the committee.

To revive gas-based power generation, the government on March 25 approved a mechanism for importing gas for power generation and supply of such power through a subsidy grant. Union government-controlled GAIL India would procure LNG. It would also be the e-bid operator outside Gujarat; within the state, Gujarat State Petroleum Corporation would be the operator.