A meeting of the Cabinet Committee on Economic Affairs, presided over by Prime Minister Narendra Modi, gave the go ahead that will immediately lead to the resumption of power generation to the extent of 14,000 MW, officials said.
“The additional generation would help light up many unconnected households in the country, besides benefiting the public at large, including farmers and poorer sections of the society who have limited access to electricity,” an official statement said.
“This decision will also help improve grid stability and safety, as gas based plants are ideal for being used as spinning reserve, and for meeting peaking power requirements, as they can be started and shut down at very short notice,” it said.
“This gains importance especially in the context of India’s aspiration to rapidly scale up renewable generation. Gas based power is also environment friendly and much less polluting than coal based generation.”
“In order to revive these stranded gas-based plants, the mechanism envisages importing Regasified Liquified Natural Gas (RLNG) for supply to these plants so that they can generate power,” a cabinet communique said.
Speaking to reporters after the meeting, Power and Coal Minister Piyush Goyal told reporters that “GAIL and GSPL (Gujarat State Petronet Limited) will be permitted to import gas by purchasing on a spot basis from the international market and supply to companies, who can bid for this gas depending on their requirements”.
“The bidding process will be reverse bidding, where companies can bid for this gas for upto 30 percent of their plant load factor (PLF),” he added.
Explaining the reverse bidding to keep down power tariffs, Goyal said: “We could start the bidding at around Rs.5.50 a unit and then see if we can go lower depending on the international gas prices.”
The need for this intervention has arisen because discovery of domestic natural gas in the Krishna-Godavari basin, notably from the blocks awarded to Reliance Industries, had raised expectation of considerable increase in the availability of domestic gas in the country.
Accordingly, a large number of gas-based plants were set up by developers, some with firm allocation and others with expected allocation. But the supply of domestic gas to power plants started declining since 2012 and stopped from March 2013. Since then, these plants have either stopped operating or being under-utilized.
“Out of 24,150 MW gas-grid-connected power generation capacity in the country, 14,305 MW of capacity has currently no supply of domestic gas and may be considered as stranded,” the statement said.
“This represents an investment of over Rs.60,000 crore which is at the threshold of becoming non-performing assets. The balance capacity of 9,845 MW involving an investment of over Rs. 40,000 crore is also working at a sub-optimal level. (IANS)