1. Sacrifices all round to fuel gas gencos

Sacrifices all round to fuel gas gencos

To salvage 14,305 MW of stranded gas-based power capacity, the government has decided to put in place a transient...

By: | New Delhi | Updated: March 26, 2015 12:58 AM

To salvage 14,305 MW of stranded gas-based power capacity, the government has decided to put in place a transient mechanism where the plants can run at 30% plant load factor with assured supply of gas, but subject to a tariff cap of Rs 5.50 per unit. The operators of gas-based power units will get monetary support from the government for a period of one year so as to be able to service their debt while forgoing their return on equity.

In a reverse bidding method, the plant willing to take the lowest amount of support from the government’s power system development fund (PSDF) to maintain tariff at R5.50 will be given imported gas. The move would benefit Lanco Infratech, Essar Power, Reliance Power, GVK Group and GMR Energy, among others.

Announcing the Cabinet Committee on Economic Affairs decision on Wednesday, power and coal minister Piyush Goyal said with this new arrangement, electricity generation in the country would be enhanced by 79 billion units worth R42,000 crore.

The move comes at a time investments of about Rs 60,000 crore in stranded power plants are on the verge of becoming non-performing assets.

Even the balance capacity of 9,845 MW entailing an investment of over Rs 40,000 crore is operating at suboptimal levels due to paucity of gas.

“GAIL and GSPC will import LNG and supply to gas-based power plants,” Goyal said, adding that the new contingency mechanism involved “sacrifices” by all stakeholders including the operators, the Centre and state governments. To make the new system viable, public sector gas marketer GAIL (India) will cut its transportation tariff and marketing margins while LNG regasification terminals will reduce their charges. Though the exact details of the tax concessions are not immediately known, an earlier proposal was that states will waive VAT, CST and other levies on gas and RLNG, while the Centre will offer customs duty exemption for RLNG.

The government, Goyal said, would import 10 million standard cubic metres per day (mmscmd) in the monsoon season, that is, during the next five months. The imports will be ramped up to 18 mmscmd in the remaining seven months of the year.

Wednesday’s decision indicates that the government has abandoned an earlier plan to pool gas from multiple sources, including from abroad. Power ministry sources said since spot gas prices in the international market have come down drastically, pooling would have burdened the gas-based power plants.

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  1. R
    Raj Manglani
    Mar 26, 2015 at 2:26 am
    Why were these gas based projects set up in the first place without ensuring adequate gas supplies? This is height of stupidity!
    1. M
      Mar 26, 2015 at 9:40 am
      Modi loves to speak in a tone that raises more questions than answers!! The grey areas are deliberately kept because the truth will raise uncomfortable questions!!! The first question involves around the quantum of subsidy!! It's a well-known fact that naptha-powered plants are non-viable in countries like India due to their high import-cost, though they can be used in such countries as Iran or Russia that have huge energy reserves!!! Will the extra 79 billion units worth Rs. 42,000 crores be generated at 30 percent plant load factor?? What will be the amount of monetary-support to operators to enable them to service their debt for one year? What happens after one-year?? Is their a collusion between the govt. and operators to drain the exchequer/the so-called PSDF fund?? I guess Modi had collaborated with GMR, Adani, GVK, Lanco, Reliance about this scam even before coming to power last year!! I remember during campaigns last year, Modi in his messages would say "we have coal, but the power plants are shut, because there's no supply." It won't be wrong to ume that these business houses bank-rolled Modi's election-campaign, after-all Modi flying in Adani's private-jet was well covered by the media!!! There's absolutely no-doubt that the coal auction process is a huge scam and it's just a matter of time before someone sends a complaint to Central Vigilance Commision (CVC) and files a PIL in the SC for an investigation!!! Modi gave away a coal-mine in Jharkhand to Essar yesterday at a cost of Rs. 485/ton for their plant in Mahan, Madhya Pradesh!! Ironically, India imports the same coal (steam-coal in technical terms) from Indonesia at a cost of more than Rs. 1800/ton (i.e. $60/ton) for using in state-run NTPC (National Thermal Power Corporation)!!! I don't understand why NTPC can't build half-dozen so-called UMPPs (Ultra Mega Power Plants with installed-capacity of 4000 MW and above) in CG, MP and Jharkhand, the most coal-rich states of India and buy-coal at Rs 1800/ton from Coal India instead of buying from Indonesia!!! The definition of corruption/fraud can't be different for Modi and Maun-moan!!! If MMS goes to jail for fraud, so will Narendra Damodardas Modi!!! It's that simple!!!

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