Power ministry to seek relief mechanism for gas projects

These projects are stuck because of lack of availability and high cost of fuel

The power ministry may seek a relief mechanism to make gas-based power projects, which are reeling under by acute gas shortage and high fuel costs, viable.

“It is important to look at a logical policy in view of high input cost for gas capacity. I will take it up in the coming weeks,” said Jyotiraditya Scindia, minister of state for power, at a media interaction on Thursday.

Scindia added that power generated using costly, imported regasified liquefied natural gas (RLNG) will not get scheduled as the output prices are regulated. “Power sector will not be able to bear a gas cost of more than $5 per million British thermal units (mBtu).”

Power secretary P K Sinha said an earlier proposal by the power ministry to subsidise the high cost of RLNG for gas-based generation was turned down by the finance ministry. “We are reworking the proposal now,” he added.

Power projects are facing acute gas shortage owing to dwindling output from Reliance Industries’ KG-D6 block off the Andhra coast. The Centre has notified an increase in prices under a formula, which will push up gas prices from the current $4.2 to $8.4 an mBtu.

The new price regime will kick in from April 1 and be applicable for five years. Every quarter, prices will be reviewed and adjusted, depending on how global prices move. Scindia said the sector would get additional gas of around 8.9 million standard cubic metres per day over the next three years.