In a move to help gas-starved power plants, power ministry has moved a draft note to Cabinet to seek approval for pooling imported liquefied natural gas (LNG) with the fuel available from the KG-D6 block after meeting the requirements of fertiliser units. At present, 7,800 MW of gas-based power generation is stuck due to scarcity of natural gas. Under the gas-pooling mechanism, around 3,000 MW capacity power plants will get gas in the financial year 2014-15 and the electricity produced from these plants will be sold at a tariff of Rs 7 per unit. Meanwhile, the remaining 4,800 MW capacity plants will be able to get natural gas in FY 2015-16.
The proposed electricity tariff by power ministry was derived after pooling the prices of imported and domestic gas and deducting government subsidy. Earlier, in June, the government had approved the pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG. Such averaging pricing will raise the effective gas price to $11.43 per million British thermal unit (mmBtu) from $4.2 per mmBtu, leading to cost of electricity generation of Rs 10.47 per unit. Meanwhile, the ministry had already stated that consumers cannot absorb such a high cost of electricity and so the government should subsidise any cost over and above Rs 7 per unit. The power ministry proposal will be finalised once the government agrees to provide the subsidy.
India’s total installed power generation capacity is 225,793 MW, of which 18,714 MW or nearly 8 percent, is gas-based. At present, power plants in the country get just 17.25 million standard cubic metres per day of gas from domestic fields as against an allocation of 71.29 mmscmd on account of declining gas supplies from Reliance Industries' eastern offshore KG-D6 fields. The Gas production at the Reliance KG-D6 field fell 53 percent to 49.2 billion cubic feet in the April-June quarter from a year earlier mainly due to geological complexity, natural decline in the fields and higher than envisaged water ingress.
The proposed electricity tariff by power ministry was derived after pooling the prices of imported and domestic gas and deducting government subsidy. Earlier, in June, the government had approved the pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG. Such averaging pricing will raise the effective gas price to $11.43 per million British thermal unit (mmBtu) from $4.2 per mmBtu, leading to cost of electricity generation of Rs 10.47 per unit. Meanwhile, the ministry had already stated that consumers cannot absorb such a high cost of electricity and so the government should subsidise any cost over and above Rs 7 per unit. The power ministry proposal will be finalised once the government agrees to provide the subsidy.
India’s total installed power generation capacity is 225,793 MW, of which 18,714 MW or nearly 8 percent, is gas-based. At present, power plants in the country get just 17.25 million standard cubic metres per day of gas from domestic fields as against an allocation of 71.29 mmscmd on account of declining gas supplies from Reliance Industries' eastern offshore KG-D6 fields. The Gas production at the Reliance KG-D6 field fell 53 percent to 49.2 billion cubic feet in the April-June quarter from a year earlier mainly due to geological complexity, natural decline in the fields and higher than envisaged water ingress.
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