Editor's Note

Power Watch India - - NEWS -

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

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