Pvt power cos to get up to Rs 7,500 cr subsidy in 2 years

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

A subsidy of up to Rs 7,500 crore will be provided to private power companies in the next two years as part of the scheme approved by the Cabinet to revive 31 electricity generating units stranded for want of gas.

Thirty-one power stations with a combined capacity of 14,305 megawatt, which are languishing for want of gas, can bid support from the Power System Development Fund (PSDF) for generating 30 percent of their installed capacity, called plant load factor or efficiency, with imported liquefied natural gas (LNG).

Power companies seeking the lowest support from PSDF, after considering an electricity tariff of Rs 5.50 per unit, will get the first right over LNG, whose delivered price too will be slightly reduced by asking importer and transporter to take a hair-cut in marketing and operational cost, Power Secretary P K Sinha said on Thursday.

The Cabinet Committee on Economic Affairs (CCEA) Wednesday approved a financial assistance scheme for private power companies for two years, with Rs 3,500 crore of support capped for 2015-16 and Rs 4,000 crore for the following year.

While private power stations will bid for the financial support, the actual money from PSDF, which collects fines from states for grid indiscipline, will go to the distribution company. The PSDF kitty has accumulated Rs 9,500 crore as of now.

To make the imported fuel affordable, the Union government has also decided to waive service tax while the importer will take a 50 percent cut in the cost of converting the liquid gas (LNG) into its gaseous state, Sinha said State gas utility GAIL will cut its marketing margin by 75 percent and while the pipeline transportation tariff too would be cut by 50 percent.

All these measures together will help bring down the delivered cost by at least USD 1 per million British thermal unit. Besides helping generate 79 billion units of electricity, valued at about Rs 42,000 crore, the arrangement would help the stranded assets repay debt but promoters will have to forego return on equity, he said.

At present, out of the 24,150 MW of gas-based power plants, 14,305 MW capacity of projects are stranded because of limited availability of domestically produced natural gas imported LNG is costly.

Another 5,500 MW of gas based power plants are operating at less than 30 percent of their installed capacity. These too would be benefited with the new arrangement, which will kick start in 30-35 days.

Sinha said there will be no change in allocations of domestic gas. State-owned gas utility GAIL India has been tasked to import LNG for power plants outside Gujarat, where GSPC will import the fuel to revive power plants.