 "Get ready to bear the heat this summer as 24,000 Mw power plants go offline")
Even as the country braces for a harsh summer, 24,000 Mw of gas-based power projects would go off the grid, owing to no supply of fuel. The units affected belong to state-owned NTPC and the Gujarat State Electricity Supply Company, as well as private players such as CLP India, Torrent Power, GVK Industries, and Lanco Power GMR Energy.
The central government was supporting the projects through a subsidised gas-bidding programme, but has now decided to shelve it. This follows reluctance from the states that have refused to purchase power at Rs 4 per unit.
“Gujarat, Andhra Pradesh, and Maharashtra, which have gas-based power projects, have refused to buy power from these plants, citing high costs. After the last round of bidding last year, states did not sign power-purchase agreements,” said a senior power ministry official.
Piyush Goyal, minister of state with independent charge for coal, power, mines, and new and renewable energy, was also reported to have said, “The scheme is being discontinued. But, if there is interest from all sides, we can resume it.”
Of the 24,150 Mw of gas grid-connected power generation capacity in the country, 14,305 Mw has no supply of domestic gas. Investment in these projects, to the tune of about Rs 60,000 crore, could become non-performing assets.
The remaining capacity (9,845 Mw), with investment of about Rs 40,000 crore, is working at sub-optimal levels, because of the limited domestic supply of gas.
The government floated a reverse e-auction process for power plants to avail subsidy for buying costly imported gas — regasified liquefied natural gas (RLNG). This involved a reverse bid for the subsidy amount to come from Power System Development Fund (PSDF) to purchase RLNG.
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The bid amount reflects the amount of subsidy support that the power generators seek from the government. The bidding was held on the e-bidding platform built by public sector undertaking the MSTC.
The eligible bidders indicated the total incremental electricity they would generate using the e-bid RLNG. The companies also quoted the subsidy they required to ensure the net purchase price for the distribution companies to buy that power, without exceeding the target power load factor.
Rescue efforts
June 2015: Government initiated programme to auction subsidised imported gas
June 2015-September 2016: Four rounds of bidding
Average power tariff: Rs 4.5 per unit
Gujarat, Andhra Pradesh, and Maharashtra refuse to buy costly gas-based power
In September, no state signed a power-purchase agreement
The four rounds were held in June 2015, and March, May and September last year.
Under a unique arrangement, every stakeholder in the supply chain would have to forego a part of their returns on operations. While the central government would give up service tax it levies on gas sourcing, power plant operators would forego return on equity.
GAIL would source the imported gas, and, along with Gujarat State Petronet, would forgo 50 per cent of their transmission rate and 75 per cent of marketing margin in supplying imported RLNG.
The lead banker to these plants would ensure all receipts of money would be utilised only for payments towards the variable cost of generation (fuel cost) and the operation and maintenance expenses, in accordance with regulatory guidelines. Debt servicing would be made after capping fixed cost.