Cabinet nod for fin support to revive stranded power projects

31 power stations with a combined capacity of 14,305 Mw can bid for support from Power System Development Fund for generating 30% of installed capacity using imported LNG

In a bid to revive Rs 60,000 crore of stranded power projects, the Cabinet today approved a financial support to the private companies to help them use costly imported gas (LNG) for generating electricity.

Thirty-one power stations with a combined capacity of 14,305 megawatt, which are languishing because of want of gas, can bid for support from the Power System Development Fund for generating 30 per cent of their installed capacity, called plant load factor, using imported liquefied natural gas (LNG).

Power companies seeking lowest support from PSDF, after considering an electricity tariff of Rs 5.50 per unit, will get the first right over LNG, whose delivered price too will be slightly reduced by asking importer and transporter to take a hair cut in marketing and operational cost, Power Minister Piyush Goyal said after a meeting of the Cabinet Committee on Economic Affairs.

While the private power stations will bid for the financial support, the actual money from PSDF, which collects fines from states for grid indiscipline, will go to the distribution company.

PSDF currently has accumulated a kitty of Rs 9,500 crore but the CCEA had decided to cap the support at Rs 3,500 crore in 2015-16.

Besides helping generate 79 billion units of electricity, valued at about Rs 42,000 crore, the arrangement would help the stranded assets repay debt but the promoters will have to forego return on equity, he said.

Currently, out of the 24,150 MW of gas-based power plants, 14,305 MW capacity of projects are stranded because of limited avaialbility of domestically produced natural gas and costly imported LNG.

Another 5,500 MW of gas based power plants are operating at less than 30 per cent of their installed capacity. These too would be benefited with the new arrangement, which will kickstart in 30-35 days.

Goyal said there will be no change in allocations of domestic gas. Also, the proposal to average out price of cheaper domestic gas with costlier LNG to make the fuel price uniform to all projects has been put in cold storage as of now.