NEW DELHI: In a bid to support the stranded gas-based power plants in the country, the government on Tuesday started the auction for subsidy to import natural gas. Around 14 bidders including GMR, Torrent, GVK, Lanco Infratech among others have put in aggressive bids.
Producers seeking the lowest subsidy will win the first right over 8.9 million standard cubic meters per day of imported gas on offer at reduced prices. The subsidy support is for distribution companies to bring down electricity tariffs and make the cost of power affordable.
In all 14 plants, with a combined power generation capacity of 8,108 MW, were technically qualified to participate in the first round of reverse e-auction where bidders were asked to quote subsidy in rupees per unit they need so that they can generate electricity at maximum of Rs 5.50 per unit.
The auction started at a base price of Rs 1.74 per unit considering a plant load factor (PLF) or capacity utilisation of 35 per cent of the installed capacity and after four rounds the subsidy sought had come down Rs 1.47 per unit, according to the e-auction data available.
GAIL India will import the fuel. The government will allocate enough gas to run 25- 35 per cent of a plant’s capacity, helping the operators generate enough funds to pay interest. The winners will be announced at the end of the auction.
“Out of the total subsidy of Rs 3,500 crore earmarked for the year ending March 31, Rs 790 crore will be paid for the ongoing auction,” said R N Choubey, Special Secretary in the Ministry of Power.
After stranded power plants, 1.1 mmscmd of gas will be offered to plants that are receiving gas from domestic fields but at sub-optimal levels.
India’s total gas-based power generation capacity is 27,123 MW. Out of this, plants with capacity of 14,305 MW are stranded due to non-supply of gas, while those with 9,845 MW receive limited domestic gas. Its natural gas output from local fields declined 35 per cent in the past four years as Reli ance KG- D6 block began to decline production.
Overall, 31 power stations with a combined capacity of 14,305 MW are languishing because of want of gas. They 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 Liquefied Natural Gas.