Saddled with scores of gas-based power plants which are running at stranded capacities owing to inadequate availability of domestic natural gas, the Power Ministry has sought a subsidy to the tune of Rs 24,500 crore to allow these utilities use an otherwise costly regasified liquid natural gas (RlNG) by pooling its price with that of domestic gas, a move which would allow them to run at full throttle.
In a Cabinet note prepared by the Power Ministry, which has been sent for the approval of the Cabinet Committee on Economic Affairs (CCEA), it has strongly advocated the urgent requirement of RlNG being pooled with natural gas for scores of gas-based power plants across the country which are starved of the natural resource mainly owing to KG-D6 basin’s output having nosedived from 63 mmscmd in late 2011 to less than 14 mmscmd at present.
Simply put, the Power Ministry seeks to provide domestic and imported RlNG at an average ‘pooled price’ to the common consumer.Some of the entities whose gas-based plants are currently running on half of their capacities or at stranded capacities, include NTPC, lanco Infratech, Reliance Power, and GMR Energy among others.
An Empowered Group of Ministers on August 23, 2013 had decided that the fertiliser sector’s gas supply would be capped at 31.5 mmscmd and that all the additional domestic gas available should be given to the power sector for fuelling its gas-based utilities in the country. In other words, the Government had made it clear the fertiliser sector would continue to get top priority in domestic gas allocation and the power sector would have to make do with whatever is leftover gas.
However only1.125 mmscmd of domestic gas is additionally available for the power sector in the current fiscal. For 2014-15 only 3.980 mmscmd gas would be left for it, while for 2015-16 only 6.895 mmscmd of it would be available for the sector, as per the Petroleum Ministry’s estimates.
This scenario, official sources told The Pioneer, forced the Power Ministry to move the Cabinet note seeking pooling of domestic gas prices with that of RlNG prices (which is costly and is not available in the country).
The ministry has suggested to the CCEA in the note that even after capping the fertiliser sector’s requirement and giving the additional natural resource to the power sector, the shortfall will remain. Therefore in order to bridge this gap, RlNG can be imported and it can be pooled with the price of domestic gas. And since RlNG is costly, some subsidy can be given to make gas-based power generation viable.
It has proposed that 1.125 mmscmd of domestic gas available for the power sector in the current fiscal can be pooled with 8 mmscmd of RlNG, and similarly for 2014-15, 3.980 mmscmd of domestic gas can be pooled with 8 mmscmd of RlNG.Subsequently in 2015-16, 6.895 mmscmd of domestic gas can be pooled with 14 mmscmd of RlNG, the note has suggested.
To make this proposal viable, the Power Ministry has sought subsidy to the tune of Rs 2,498 crore for the current fiscal, Rs 10,992 crore for 2014-15 and Rs 10,849 crore for 2015-16.
The power ministry has proposed to bridge power prices from gas-based power plants at Rs 5.50 unit in 2013-14, Rs 7 per unit for 2014-15 and Rs 7.50 per unit for 2015-16.By doing so, not only generation from gas-based power plants increase, gradually the plant load factor of these utilities too will go up, sources said.