The government after a successful reverse auction by developers of gas based power plants declared that 10 idle power plants with a capacity of 6,860 MW will receive imported gas to operate their plants at 35% PLF initially from June to September 2015. This will help these plants meet their debt service obligations. The plants are expected to supply below Rs 4.70 per unit to state discoms. The plants belong to GMR Energy, GVK Power, Torrent Power, Lanco Infratech, RVK Energy, RGPPL and, GSECL. Another five power plants belonging to NTPC, CLP India, GSECL and Torrent Power which are running at low levels with domestic gas, were successful in the auction. These plants will supply below Rs 3.39 per unit to purchaser discoms during the above period. The government support of Rs 843.99 crore will be required for discoms to enable them to purchase this gas based power. The discoms would be given support from the Power System Development Fund (PSDF) to purchase this costly power. PSDF was constituted by CERC vide regulations dated 4th June 2010. The fund consisted of congestion charges remaining in the congestion charge account after release of amounts payable to regional entities, congestion amount arising as a result of difference in regional market prices due to market splitting in power exchanges, deviation settlement charges standing to the credit of the regional deviation pool account fund after final settlement of claims, reactive energy charges collected by RLDC and additional transmission charges collected during auction of STOA advance bilateral transactions.
The auction has resulted in revival of a cumulative gas-based generation capacity of 10,270 MW resulting in generation of additional 5.70 billion units of electricity during the peak summer months. The Cabinet has already approved the mechanism for importing gas for stranded and under-utilised power plants and supply of such electricity to discoms through monetary support. To make gas affordable, states will forgo some taxes while gas transporters and import terminals will offer discounts on charges for their services rendered to import LNG for this purpose. Power plants will completely forgo return on equity while the Centre will draw from the PSDF to support the scheme that will help plants use 30-35% of their capacity and repay debt. The government had made 10 mmscmd of gas available for bidding — 8.9 mmscmd for stranded plants and 1.1 mmscmd for those receiving some domestic gas for June-September 15. The Centre will again invite bids for 15 mmscmd of imported RLNG post -September.
No doubt this is a temporary solution and will allow stranded gasbased plants to operate for the next four months, at partial load factor but a more permanent solution will have to be found for these plants since subsidising can never be a solution to the problem. Unless distribution reforms are set right the actual price of electricity will never be recovered from consumers and subsidising electricity from such funds would continue to be a short term solution. The actual power cost can only be recovered if distribution losses are brought down to supply 24x7 electricity as promised to all.
Jayant D Kulkarni