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Oil ministry proposes to bring gas-based power plants under price pooling scheme

(02 Feb 2015)

 The oil ministry wants all domestically produced gas to be included in the price pooling scheme to save about Rs 1,00,000 crore of private power projects, a proposal that would adversely affect some electricity generation plants operated by state-owned NTPC. 

The Ministry for Petroleum and Natural Gas has informed the power ministry that no additional gas output will be available from fields auctioned under the New Exploration Licensing Policy until March 2017. If the price pooling scheme is to be a success, it is imperative to include gas produced by stateowned companies. 

Under a gas price pooling proposal prepared jointly by both ministries earlier, any additional gas produced in the country in the next four years, along with imported liquefied natural gas, would be supplied to help operate power plants at 40 per cent capacity. The gas would be sold at an average 'pooled' price, while electricity from the plants sold to distribution companies would be capped at Rs 5.5 per unit. 

Of the country's 24,000 Mw of gas-based generation capacity, plants with 16,000 Mw capacity are stranded, while the remainder is underutilised. 

The power ministry has so far spared NTPC from the pooling scheme because it will raise electricity tariffs from the company's projects by over Rs 1 per unit. NTPC has 3,900 Mw of gas-based plants that operate at about 40 per cent of capacity and the electricity tariff is about Rs 4.30 per unit, a company official said. 

The utility gets gas from fields allotted to state-owned companies Oil & Natural Gas Corporation and Oil India, the price of which is administered by the government. 

"We have suggested to the power ministry that projects based on administered price mechanism (APM) gas be included in the price pooling scheme since there is no new gas available for power plants from NELP fields till 2016-17," a top oil ministry official told ET. To lower tariffs, the oil ministry has also suggested lowering the fixed cost realisation of power developers from the present Rs 1.31 per unit and a 50 per cent cut in re-gasification charges of imported gas. 

Of the 14.5 million standard cubic metres a day of domestically produced gas supplied to power stations in the second half of December, 13.9 mmscmd were from APM fields and 0.5 mmscmd was made available to projects from the KG D6 block operated by Reliance Industries. Besides NTPC stations, APM gas is supplied to plants operated by GVK Power and Torrent Power. 

News Source : Economic times