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The revised domestic gas price of $5.61/mBtu (rise of $1.41 from $4.2/mBtu) is likely to have a negligible impact on power prices. The hit will be just 50-60 paise per gas unit purchased, said producers.
The operational gas power capacity of 16,000 Mw is hobbled for want of cheaper domestic fuel. The UPA government had proposed to double the gas price from $4.2/mBtu to $8.4/mBtu.
The ministry of power had proposed to pool imported gas with domestic one and keep the cost to be paid by the generators under $5.5/mBtu.
"In comparison to the earlier price, this is a major relief. Once the supplies improve, likely by March, a higher ratio of domestic gas can be mixed in the optimal gas pool to supply to the power plants," said a senior executive of a power company.
In a draft Cabinet proposal prepared by the ministry of power, the ministry has suggested the pooling of domestic gas and imported re-gasified liquefied natural gas (RLNG) to be supplied to the power sector. Currently, the power producers are sourcing RLNG in the range of $12-$15 per mBtu. The domestic gas was available to the power and fertiliser sectors for $4.2/mBtu, which was put under review after the gas supply dipped from the Reliance Industries Limited-owned KG-D6 basin.
"With this decision there is some certainty to the sector as finally a price has been announced," said Ashok Khurana, director-general, Association of Power Producers.
For the total gas power capacity of 24,149 Mw, the requirement is 93 million standard cubic metres a day. Of this the operational capacity of 16,000 Mw is receiving less than 30 per cent of the requirement from the domestic market. An investment of Rs 1.2 lakh crore is in danger of becoming non-performing assets, with capacity not operational.
