Bids for subsidy by gas power projects postponed by 1 day

The process of bidding by stranded gas-based power projects for government subsidy support to purchase expensive imported LNG to restart stalled plants has been postponed till Tuesday.

"On the request of gas-based power plants developers, e-auction process for PSDF support under the Scheme for Utilisation of the Stranded Gas-based Power plants, which wasscheduled to start today at 11 am, has been postponed by one day. Now, e-auction will start tomorrow at 11 am," an official statement read on Monday.

Sources said the e-auction on Tuesday will be for stranded power plants, and the same for units receiving sub-optimal domestic gas will be held on May 13.

Gas-based power stations that are either shut for want of fuel or receiving some domestically produced gas and running at sub-optimal levels are eligible for government subsidy to help them buy costly imported liquefied natural gas (LNG).

The list of technically qualified bidders will now be out two hours before the start of e-auction tomorrow. As many as 31 power stations with a combined capacity of 14,305 MW, whichare languishing, can bid for support from the Power System Development Fund (PSDF) to generate 30 percent of their installed capacity, called plant load factor, using importedLNG.

Power companies seeking lowest support from PSDF, post consideration of an electricity tariff of Rs 5.50 per unit will get the first right over LNG, whose delivered price toowill come down through importer and transporters taking a hair cut in marketing and operational costs.

Under the scheme, LNG will be imported by state-owned GAIL for the power plants as well as units receiving domestic gas up to a certain threshold capacity, sources said.

The government will provide as much as Rs 3,500 crore in financial support to the power plants this fiscal and another Rs 4,000 crore in the next, they said.

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

State gas utility GAIL India and Gujarat State Petroleum Corp (GSPC) have been designated importers of LNG. The new arrangement would help 5000-5,500 MW of gas plants in southern India, particularly Andhra Pradesh and Telangana.

Out of 24,150 MW gas grid-connected power generation capacity in the country, 14,305 MW has currently no supply of domestic gas and may be considered as stranded. This entails an investment of over Rs 60,000 crore, which is at the threshold of becoming Non-Performing Assets