Gas policy gives priority to efficient power plants: APP

“Most efficient power plants who quote least subsidy will get the gas,” said Khurana, adding that 30 percent of PLF will require minimum 1.2 mmscmd.

Below is the transcript of Ashok Khurana’s interview with CNBC-TV18's Shereen Bhan and Nayantara Rai.Shereen: This seems to be different from the proposal that was being discussed, the proposal that we understand was sent to the Cabinet. There is now talk about a reverse bidding process in order for companies to be able to bid for the imported gas, domestic allocation of gas is not going to be touched. What do you make of the gas pooling policy that has just been announced?A: It is not a gas pooling policy once the domestic gas is not beeing pooled it is not a gas pooling capacity. It is basically a proposal where gas would be imported and then you are allowing that gas to have subsidy with fixed pricing of the power at Rs 550. I suppose. That is affordability threshold over there. So anyone who bids below that the least subsidy levels that means a chap who can make the most sacrifice on RoE or who has the most efficient plant frankly speaking, you have the turbines so you will have most efficient plants. So its combustion rate will be very high. So actually it adds this premium to the efficient gas plant so you can utilise the limited gas available from imported source with a concession of VAT, with a concession of the transportation and all that we are discussing. I have not seen the details, I hope those concessions are there. So therefore you have those concessions. So the most efficient plant who can quote the reverse from Rs 5.50/unit onwards will get that gas with all these concessions.

Q: This is not the pooling policy that was being discussed for almost the last 12 months or so and this is not what we were given to understand that the cabinet was in fact considering because domestic allocation is not being touched. So, there is in that sense no pooling of imported gas versus domestic gas. But is it going to be enough. He talked about 31 stranded gas power plants, they are talking about 10 mmscmd of gas pre rains, 18 mmscmd of gas post the monsoon I would imagine. Is this going to be enough to get these stranded gas based power plants up and running?A: No it won't be. It all depends at what capacity they will run. Q: The minister has said that companies will be allowed to bid up to 30 percent of plant load factor.A: So, for 30 percent of the plant load factor basically would mean they need annually about and daily about 1.2 mmscmd of gas over there. Those who have efficient plant they may use less. Therefore what I am saying is this policy gives advantage to those plants which can utilise the gas more effectively and more efficiently and convert that to power. That means the new plants will have advantage over the old plants. Government will keep on increasing as the capacity and the re-gasification facility increase but it is a good beginning. We didn’t get a gas pooling because they had constraints, people who already allocated gas they did not want to surrender those, but at least it is a beginning for those plants who can bid, sacrifice their ROE and at least meet a part of debt service over there.