The government is working on a scheme to salvage 24,000 MW of stressed gas-based power plants, built at an investment of over Rs 1 lakh crore, by importing natural gas and bundling the output with cheaper solar energy.
The power and petroleum ministries are working on the new proposal. The earlier scheme entailing subsidy has been shelved. The proposed new scheme will offer no subsidy and hopes to help operate the power stations at 90% capacity by selling the bundled power.
A senior government official said the earlier proposed e-regasified liquid natural gas scheme (e-RLNG), which involved an e-auction, was successful when there was electricity shortage in the country. He also said that in the later tranches, the scheme did not garner much interest from the developers.
He said bundling of solar power with an equal amount of gas-based power is expected to result in lower cost of production than blending domestic and imported gas-based power.
Power Trading Corp of India (PTC India) has been asked to work on the proposal, an official said. The gas is proposed to be imported by GAIL India with concessions and haircuts by central and state governments, power companies and gas transporters to make it affordable.
GAIL has indicated to the power ministry that it can import LNG for about Rs.6 per unit, and deliver it to power plants for Rs.8 a unit, which includes re-gasification, transit and taxes, sources said. With this, power can be generated at about Rs 4 per unit. The power ministry’ plan is to blend this with the assumed average renewable energy cost of Rs 2.75 per unit, expecting the blended rate will find enough takers among distribution companies under the merit order despatch rule.
LNG prices are under immense pressure this year due to oversupply. Spot LNG rates for delivery to Asia are between Rs 5 and Rs 6 per unit. Indiadelivered LNG rates had fallen to less than Rs 4 a few months ago but has now risen due to winter demand.
ET had earlier reported that the country’s largest lender, State Bank of India, has sought immediate government intervention to salvage the gas-based power plants from becoming non-performing assets.
SBI sought a long-term policy intervention to revive gas-based plants, and has asked for financial support from collections of coal energy through the National Clean Energy and Environment Fund. It has also sought a ‘must-run’ status to gas-power stations, similar to renewable energy plants, and reimbursement of fixed costs from the clean-energy fund to power distribution companies that enter into long-term power purchase contracts with these gas-based facilities.
The bank has also sought bringing natural gas under the ambit of goods and services tax.
The previous revival scheme, an extension of the previous rounds of subsidised gas auction schemes to power plants, was recommended by a high-level empowered committee on stressed assets. The government had planned to aggregate power from these plants through reverse online auction and do away with the subsidy component.
The proposed concessions include waiver of state and central taxes on imported LNG, waiver of GST on regasification and transportation of the fuel, reduction of pipeline tariff charges and marketing margin by GAIL. Electricity transmission charges for stranded gas-based projects are also proposed to be sacrificed. Power companies will not make any return on equity.
Referred from economic times, 05 Dec 2019.