The Power Ministry expects the empowered pool management committee to be in place within a month to enable stranded gas-based power plants get imported gas at affordable rates.

The committee will have representatives from the Ministries of Power, Finance, and Petroleum & Natural Gas, GAIL (India), GSPL, as well as Central Electricity Regulatory Commission (CERC), a Power Ministry official said. While the CERC will look into technical requirements as well as the demand for gas, a lead banker will financially monitor the incentives being extended to these projects, the official said. GAIL has been nominated to import gas from the spot market. It is projected to import 10 million standard cubic metre a day (mmscmd) in five months of monsoon and 18 mmscmd in the other months.

Asked what prompted the government to go for imported gas and drop the proposal of gas pooling (domestic and imported) at the last minute, the official said, high electricity cost was the key reason.

Pooling would have meant higher tariff, and experience has shown that there are few takers above ₹5 a unit. Besides, the host States — where the power plants are located — would not have willingly agreed to let make sacrifices on local taxes and levies if the costs were high.

Almost 14,000 MW of capacity with an investment of over ₹60,000 crore is stranded because of non-availability of fuel. In addition, about 10,000 MW power plants are receiving limited domestic gas and are operating at very low plant load factor. The beneficiary States will mainly be Gujarat, Maharashtra and Andhra Pradesh.

The committee has been given the flexibility of reviewing the preliminary price of ₹5.50 a unit fixed by the government. “The power plants will have to bid for their gas requirements on the price fixed. Those bidding the lowest will be given preference. Basically, premium for efficiency will be the criteria.”

To ensure that the price of electricity remains within reach, all the stakeholders have decided to let go of their benefits. GAIL and GSPL will let go the transportation tariff (50 per cent), marketing margins (75 per cent) and re-gasification charges (80 per cent). The Central and State governments have agreed to exempt the fuel from certain applicable taxes and levies. Power developers would completely forego the return on their equity.

“But, these incentives are for the gas being imported for these projects, not regular imports,” the official clarified.

The government will also use the money from the Power System Development Fund (PSDF) to support the distribution utilities that will buy this power.

The PSDF has a corpus of ₹9,500 crore. For 2015-16, the money to be extended for such projects will be ₹3,500 crore, and for the next year ₹4,000 crore.

Related Topics
comment COMMENT NOW