Stranded gas-based power projects to bid for subsidy tomorrow

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Stranded gas-based power projects will tomorrow bid for government subsidy support so that they can buy expensive imported LNG to restart the stalled plants.

While the technical bids closed on Friday, the bidding will start on Monday morning, official sources said.

Gas-based power stations, which are either shut for want of fuel or are receiving some domestically produced gas and running at sub-optimal levels, are eligible for government subsidy to help them buy costly imported liquefied natural gas (LNG).

The list of technically qualified bidders will be revealed two hours before the start of e-auction on Monday, they said.

As many as 31 power stations with a combined capacity of 14,305 MW which are languishing because of want of gas can bid for support from the Power System Development Fund (PSDF) for generating 30 per cent of their installed capacity, called plant load factor, using imported LNG.

Another 23 plants are currently getting inadequate supplies from domestic fields.

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 reduced by asking importer and transporter to take a hair cut in marketing and operational cost.

Under the scheme, LNG will be imported by state-owned GAIL for the stranded gas-based power plants as well as for units receiving domestic gas up to a certain threshold capacity, sources said.

The government will provide as much as Rs 3,500 crore in financial support to the power plants this fiscal and another Rs 4,000 crore in the next, they said.

Currently, out of the 24,150 MW of gas-based power plants, 14,305 MW capacity projects are stranded because of limited availability 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.

Sources said the e-auction on Monday will be for stranded power plants and the same for units receiving sub-optimal domestic gas will be held on May 12.

State gas utility GAIL India Ltd and Gujarat State Petroleum Corp (GSPC) have been designated importers of LNG.

The new arrangement would help 5000-5,500 MW of gas plants in southern India, particularly Andhra Pradesh and Telangana.

Out of 24,150 MW gas grid connected power generation capacity in the country, 14,305 MW of capacity has currently no supply of domestic gas and may be considered as stranded.

This represents an investment of over Rs 60,000 crore which is at the threshold of becoming Non Performing Assets (NPAs).

The balance capacity of 9,845 MW involving an investment of over Rs 40,000 crore is also working at a sub optimal level based on the limited quantity of domestic gas in the country.