Power Ministry Announces Two Schemes to Resuscitate Stuck Gas-Based Power Units

The schemes comprise obtaining 2,000 MW from gas-based plants through auction and bundling it with an equal capacity of solar power. Another 2,000 MW will be acquired through online reverse auction, on a model similar to earlier such schemes

January 08, 2020. By News Bureau

The power ministry has confirmed two schemes to obtain 4,000 MW from gas-based power plants to save stranded units put up at a cost of about Rs 1,00,000 crore.

The schemes comprise obtaining 2,000 MW from gas-based plants through auction and bundling it with an equal capacity of solar power. Another 2,000 MW will be acquired through online reverse auction, on a model similar to earlier such schemes.

Power producers welcomed the long awaited scheme, saying it will bring nearly 11,000 MW of stranded gas assets out of NPA situation. “The scheme should be quickly executed with all waivers,” Association of Power Producers director general Ashok Khurana held. “The key to success of this scheme would depend on sourcing gas at competitive rates.”

He said with the prevailing subdued price of RLNG, gas-based power producers should be able to market their power on a standalone basis without even needing solar as bundled power. “But on a long-term basis, if India has to move towards clean energy, renewable energy and gas-based power has to co-exist,” Khurana said.

A senior government official believed a draft cabinet note is being prepared for the two schemes to procure total 4,000 MW from the stressed gas-based projects. Under the bundling scheme, the solar capacity will be given priority to run. Gas-based capacity will run at times when solar power is not available and producers will have the option to sell produce in spot market in times of back down by distribution companies. Both schemes are proposed to be run without subsidy for a minimum of three years.

The other scheme proposes to select bidder through an online reverse auction where bids would be put in by the developers based on incentives to be provided by the central and state governments to reduce end tariffs. Developers will have the option to buy gas on their own or through state-run gas transporter GAIL (India) Ltd. The proposed haircuts include waiver of state and central taxes on imported LNG, waiver of GST on regasification and transportation of the fuel, reduction of pipeline tariff charges and marketing margin by GAIL.

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