2nd bidding leg for Rs 2,600-cr power subsidy sees tepid start

The second round of bidding to bag Rs 2,600 crore of government subsidy for generating power using LNG got off to a tepid start today with enough buyers not coming forward for using the expensive imported fuel.
As many as 16 power stations belonging to companies like NTPC, GMR and GVK began bidding this morning to get government subsidy support to buy imported liquefied natural gas (LNG) for restarting their stranded electricity generating stations.
However, not enough demand for 15 million standard cubic meters per day of gas available could be generated, sources privy to the development said.
The reverse bidding -- power companies quoting the lowest tariff at which they can generate power using imported fuel if they got the subsidy support -- would start once there is demand to take all of the 15 mmscmd gas put on offer.

The actual auction, they said, couldn't begin in absence of sufficient demand being generated.
All of today, power companies quoted for the quantity of imported liquefied natural gas (LNG) they need to restart their idle plants.

The process will continue tomorrow and reverse auction at Rs 1.45 per unit floor price will start if the quantity offered is fully taken, they said.
For the auction of subsidy support, 16 bidders had been technically qualified.
Power producers bidding for the lowest subsidy support will get the first right over the fuel.
"The plant load factor (PLF) for stranded gas plants will come at 35 per cent which can go up to 50 per cent in the increment of 2.5 per cent per round," the source said.

The auction for plants receiving Domestic Gas (DGP) will be held tomorrow and "11 bids have been technically qualified for it".
According to sources, GMR, GVK, NTPC and Lanco were among the companies that had submitted bids earlier this month to be qualified for the second phase of auction of financial assistance of Rs 2,600 crore under Power System Development Fund set up by the government.
"The maximum bidding price under the reverse auction has been fixed at Rs 4.7 per unit for stranded gas based plant (SGP) and Rs 3.39 per unit for domestic gas plants (DGP)," the source had earlier said, adding that the firms will bid for a total of 15 Million Metric Standard Cubic Meter Per Day (MMSCMD).

Power Ministry had invited technical bids to undertake the reverse auction of the PSDF support to eligible gas-based power plants for a period from October 1, 2015 to March 31, 2016, as per the tender.
Under the plan, liquefied natural gas (LNG) will be imported and cash-strapped state power distribution companies will be financially supported to buy electricity from them.