After postponing the auction for re-gassified liquified natural gas (RLNG) twice in less than a week, the government will begin the bidding process on Tuesday for stranded gas-based power plants. The companies will vie for their share of subsidised imported gas in the bidding to take place on Wednesday.
The government in March approved the scheme for importing gas for nearly 24,000 mw capacity, which includes 14,300 mw of stranded capacity and 9,800 mw capacity running sub-optimally on domestic gas. The scheme would see stakeholders including GAIL, power developers, states and central government foregoing certain charges to make power affordable for stressed distribution companies. “Success of the scheme will hinge on the ability of power plants that are allocated the imported RLNG to find buyers for electricity. That’s because, as per the scheme, the net sale price of electricity to discoms has been fixed in the Rs 4.7-5.5 per unit band, well above current average prices in a market plagued by low demand. It is also higher than the average Rs. 3.5 to Rs 4.5 per unit that discoms paid last fiscal,” Crisil said.