Gas subsidy auction for power plants likely in few weeks

The third reverse e-auction to provide subsidy to buy gas for running stranded power projects and those operating at sub-optimal level is likely to be conducted in a few weeks.
"The third reverse e-auction to provide subsidy for purchasing RLNG (R-Liquefied Natural Gas) imported by GAIL is likely to be conducted in few weeks' time," a source said.
The source said, "The decision in this regard would be taken by a committee headed by an Additional Secretary in the Power Ministry next week. The gas will be supplied during non-monsoon session (April-June)."
Another source said, "Government wants to import 10 Million Metric Standard Cubic Meter Per Day (MMSCMD) through GAIL under the Power System Development Fund (PSDF)."

Earlier last year, the Centre had introduced a PSDF scheme for importing spot RLNG for the stranded gas and partly stranded gas-based plants selected through a reverse e-bidding process.
The scheme provides for financial support from PSDF. The outlay for the support from PSDF was fixed at Rs 7,500 crore (Rs 3,500 crore and Rs 4,000 crore for the year 2015-16 and 2016-17 respectively).

Auctions for the 1st phase (June 1 to September 30, 2015) of PSDF Support to gas-based power plants was held in the months of May, 2015. A combined total of 10,270 MW plants were able to secure gas allocation. The entire process was completed in less than a month and gas supply by GAIL started on June 1, 2015.

Auctions for 2nd Phase (October 1, 2015 to March 31, 2016) were held in the month of September 2015 and helped in revival of gas-based generation plants with installed capacity of 11,717.72 MW. Total incremental electricity expected to be generated under phase II is 12,472.6 million units.
Power plants rarely use costly imported LNG as electricity produced from the fuel would cost much more than that from a domestic coal-fuelled plant or a domestic gas-fired plant.