Producing power from gas at the higher approved price is possible but there will be no buyers for that electricity, Power Minister Jyotiraditya Scindia said Thursday.
"Producing power beyond $8.4 per mmbtu (million metric British thermal unit) is possible but it will never get sold. So you are producing a product the market won't buy," Scindia said at a press conference here.
The government has this month notified the doubling of domestic natural gas prices to $8.4 per mmbtu from April 1, 2014.
The new price is expected to result in higher costs for power, urea and compressed natural gas (CNG).
"My rationale is very simple, power and fertiliser are both regulated industries in terms of their output and therefore it is extremely important to look at logical pricing with regard to input," Scindia added.
He said that after the government's latest decision to limit the supply of domestic gas to the fertilizer sector, nearly 9 MMSCMD (million standard cubic metres per day) of additional gas will be available to the power sector over the next three years. Nearly 20,000 MW of capacity is tied up in gas-based power projects, he added
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The power minister described gas-based power generation as one of the many vexatious issues that he has had to deal with.
"Scarcity of gas is an issue and imported RLNG (Regassified Liquid Natural Gas) is an expensive proposition, so you are caught between rock and a hard place. Its almost a very critical problem to solve and I have tried to do what I could do. I wish I could have done some more", Scindia said.