industry

Gas allocation mechanism for power generation units in the works


NEW DELHI: In a big relief to private power companies, the government is working out a gas allocation mechanism for electricity generating units by pooling ONGC deep sea gas with LNG and subsidising the tariffs to revive about 25,000 mw projects.

India has currently nearly 25,000 mw of operational gas-based capacity, all of which is stressed because of gas unavailability.

The scheme, being discussed at the level of cabinet secretary-led high-level empowered committee, is proposed to be operated for next two financial years. The committee to address stress in the power sector due to fuel unavailability and regulatory issues is slated to meet on November 6.

“The proposal entails price pooling of 5.45 mmscmd of ONGC deep water gas, currently with GAIL, with imported LNG and supplying it to power plants. There are two options of allocation being mulled at this stage, which could be auction of the gas or allocation by rotation to the power projects,” a senior government official said.

Calculated at a cost of the present RLNG price of $9 per mmBtu, electricity tariff at the pooled price might drop to around Rs 5.90 per unit, industry experts said.

“If the government subsidises electricity tariffs by Rs 1.50-2 per unit to make it affordable, the subsidy outgo would be over Rs 15,000 crore,” an expert said on condition of anonymity.

ET on Wednesday reported that the oil ministry has floated a cabinet note proposing new price discovery mechanism and has removed power plants from the priority list for allocation of APM gas.

Association of Power Producers director-general Ashok Kumar Khurana said pooling of gas is a positive step. “This will help stressed gas-based assets to operate and meet peak demand. With improvement in gas availability, these assets can form an important component of ancillary services,” he said.

The government had launched an e-RLNG scheme in March 2015 for two years. The scheme was discontinued after two rounds of bidding after the power ministry received aggressive bids from companies.

Against total requirement of 117 mmscmd, total gas supply in 2017 was 30 mmscmd. Data available with the Central Electricity Authority showed the 24,812-mw gas based power stations in the country generated higher than the target in September and in the financial year so far. The projects operated at a capacity of 23.3% between April and September.

Power companies have been asking the government to restart the scheme as about 7,500-mw capacity is completely stranded while the rest is stressed.





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