Amid concerns over rising natural gas prices and scarcity of gas for power plants, Power Ministry has sought a subsidy of Rs 5,000 crore over the next two years to support state distribution companies, as they will have to pay double for natural gas prices from April 1.
Earlier, in June’13, the government had approved Rangarajan Committee formula for 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 around Rs 10.47 per unit. The power ministry has then said that gas based power stations would need to be supported by the government through an appropriate subsidy mechanism. As per ministry proposal, subsidy to state discoms should be the difference in actual tariff and Rs 5/unit for Rs 2014-15 and Rs 5.50 for 2015-16. The subsidy to be borne by government would be about Rs 3,621 crore in 2014-15 and Rs 2,056 crore in 2015-16 in order to support administered price mechanism for gas-based power plants.
India’s total installed power generation capacity is 225,793 MW, of which 20,000 MW or nearly 8 percent, is gas-based. With the hike in the natural gas price as per the approved formula, the cost of gas-based power will shoot around Rs 10 per unit, making it unattractive for state discoms as such a high cost of electricity cannot be absorbed by consumers. Meanwhile, the present cost of power produced with blended imported coal comes to about Rs 3.45 per unit.
Furthermore, Power Ministry also asked for three years moratorium and waiver of penal interest for projects that are operating on low plant load factor on account of less availability of natural gas in the country. Presently, around 6,000 MW of the total 20,000 MW installed gas based capacity in the country is stranded because of unavailability of natural gas.
Earlier, in June’13, the government had approved Rangarajan Committee formula for 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 around Rs 10.47 per unit. The power ministry has then said that gas based power stations would need to be supported by the government through an appropriate subsidy mechanism. As per ministry proposal, subsidy to state discoms should be the difference in actual tariff and Rs 5/unit for Rs 2014-15 and Rs 5.50 for 2015-16. The subsidy to be borne by government would be about Rs 3,621 crore in 2014-15 and Rs 2,056 crore in 2015-16 in order to support administered price mechanism for gas-based power plants.
India’s total installed power generation capacity is 225,793 MW, of which 20,000 MW or nearly 8 percent, is gas-based. With the hike in the natural gas price as per the approved formula, the cost of gas-based power will shoot around Rs 10 per unit, making it unattractive for state discoms as such a high cost of electricity cannot be absorbed by consumers. Meanwhile, the present cost of power produced with blended imported coal comes to about Rs 3.45 per unit.
Furthermore, Power Ministry also asked for three years moratorium and waiver of penal interest for projects that are operating on low plant load factor on account of less availability of natural gas in the country. Presently, around 6,000 MW of the total 20,000 MW installed gas based capacity in the country is stranded because of unavailability of natural gas.
No comments:
Post a Comment