Despite surplus, AP to buy power from stranded gas plants

Reverse bidding process for allotment of gas by Union Power Ministry starts from Saturday

Reverse bidding for the allocation of RLNG (re-gasified liquefied natural gas) along with central subsidy for stranded gas-based power project in the country will start from Saturday with the filing of technical bids followed by financial bids on May 5.

“All the eligible companies having their projects in AP as well as their counterparts in other states are taking part in the bidding process,” a senior official of Andhra Pradesh Transmission Corporation (APTransco) told Business Standard today. The bids would be finalised by May 15 so as to kickstart the scheme from June 1, the official added.

In the reverse bidding process, the companies seeking lowest support from the Power System Development Fund (PSDF) on a tariff of Rs 5.50 per unit will get the first right over RLNG, according to the guidelines issued by the Union power ministry.

The gas will be made available to the successful bidders for four months starting June 1 in the present round of bidding while a second round of bidding for a 7 month period starting from October will be conducted in August this year, the official said.

Power generation has been capped at 25 per cent PLF for the June-September period and for the later non-seasonal period, the plants will be allowed to operate at 30 per cent PLF under the scheme.

As the state is going to buy power, only those projects having power purchase agreements (PPAs) with the state power utilities will be considered for the bidding process.

AP has over 6,000 Mw of gas-based installed capacity, most of which has remained unutilised. Of these, projects with a combined capacity of around 3,000 Mw have PPAs with state power utilities.

“Out of the capacity under the PPAs, the plants with 1,500 Mw capacity have been excluded as they are receiving partial supply of domestic gas. So on the whole, just about 1,500 Mw of installed capacity from AP will be included in the bidding,” the official said. As the generation was capped at 25 per cent PLF, these plants together will add about 375 Mw of additional power to the grid, according to the official.

Having attained a power surplus status, AP will be facing the problem of plenty if it is not able to consume the additional power. “The power situation in the south and north has improved dramatically as is evident from the availability of cheaper power at a price of Rs 2-3 per unit . So it makes no sense to sell the surplus power to other states after buying it at Rs 4-5 per unit under this scheme,” the official said.

Across the country, about 14,305 Mw of the total 27,123 Mw gas-based installed capacity remains idle and the capacity of plants receiving limited domestic gas will be about 9,845 Mw, according to recent reports.