Sops via gas price pooling policy

This, after putting in place a coal pooling mechanism for power sector

 

After putting in place a coal price pooling mechanism for the power sector, the government is planning a gas pricepooling policy.

The Union power ministry, however, wants to insulate power producers from a higher gas price by seeking a subsidy from the ministry of finance under the proposed policy.

Union Power Minister Jyotiraditya Scindia said on Thursday his ministry had sought Cabinet approval for a gas pooling policy.

His ministry had opposed a higher price for domestic gas when the Cabinet Committee on Economic Affairs approved the Rangarajan formula that worked out to $8.4 a million British thermal unit from the coming April. Scindia said the power sector could absorb a gas price of only up to $5 an mBtu. “Any gas supplied beyond $5 will be unviable,” the minister told journalists. His ministry is seeking Rs 11,000-crore of subsidy payout to cover the cost of higher electricity rates. Gas pooling would help in getting stranded gas capacity of about 18,000 Mw off the ground. Even after such averaging, the cost of generation from imported and domestic gas, power is expected to cost a little over Rs 10 a unit.

The government will give only Rs 5.50 a unit to consumers, and the balance is to subsidised through direct cash pay-out.

The ministry has proposed GAIL (Gas Authority of India Limited) India as the pool operator. Besides, an empowered committee, headed by the additional secretary (power) would finalise plant-wise supply of gas for each month.

The subsidy for electricity rates would be released every quarter to GAIL, based on the recommendations of the empowered committee. GAIL would maintain a separate gas pool account for this purpose.

Scindia, who listed his achievements since taking charge of the ministry in November last year, said he was also moving the Cabinet for granting independence to Power Systems Operation Corporation, a subsidiary of Power Grid Corporation. The corporation would work as an independent grid operation company.

POWER-UP

Jyotiraditya Scindia on Thursday completed 300 days as power minister. Here is a look at some of
the achievements in the sector during that time

• 15,000-Mw capacity addition since November, 2012; 3,412 Mw added between April and August 31, 2013-14
• 20,622 Mw added in 2012-13 — highest in a year
• 777 billion units (BUs) generated since November, 2012; 399 BUs generated between April and August 31, 2013-14  
• 128,000 Mw generated on May 24—highest generation in a day
• Fuel supply agreements signed for 65,000 Mw capacity
• Decision taken by Cabinet Committee of Economic Affairs on pass-through of high cost of imported coal
• Re-allocated four coal blocks (three to NTPC and one to DVC); additional four blocks allocated to NTPC for 8,460 Mw
• Standard bidding documents for Case-2 projects and ultra mega power projects approved by the empowered group of ministers
• Power rates rationalised in most states; push for financial restructuring package for state distribution companies
• Tamil Nadu, Uttar Pradesh, Rajasthan and Haryana have finalised financial restructuring packages amounting to Rs  95,252 crore
• Decision taken to enhance power of states to grant concurrence to detailed project reports of hydro projects from Rs 500 crore to Rs 1,000 crore