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Home News Power Sector News Fourth tranche of gas bidding for power units takes bid to 21 paisa

Fourth tranche of gas bidding for power units takes bid to 21 paisa

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LNGThe latest tranche of e-bidding for providing subsidised gas to power plants witnessed bids as low as 21 paisa per unit. A total of nine stranded gas-based plants, with cumulative capacity of 5,070 megawatts (Mw), were allotted 9.9 million metric standard cubic metre per Day (MMSCMD) e-bid regasified liquid natural gas (RLNG).

This was the fourth and last round of reverse e-auction process for power plants to avail subsidy to buy costly imported gas — RLNG. This involves reverse bid for the subsidy amount to come from Power System Development Fund to purchase the RLNG.

The bid amount depicts the amount of subsidy support that the power generators seek from the government. The bidding was held on the e-bidding platform built by MSTC.

The eligible bidders indicated the total incremental electricity they would generate using the e-bid RLNG. The companies also quoted the subsidy they require in order to ensure the net purchase price for the distribution companies to buy that power, without exceeding the target plant load factor.

These plants would generate 8.8 billion units of electricity, which will be supplied at or below Rs 4.70 per unit to the purchaser discoms during the period from October 1, 2016, to Match 31, 2016, power ministry officials informed.

The successful bidders include power plants from the Southern region.

"The generation from these plants would improve the power availability in the Southern grid, mitigating to a large extent the shortage of availability and constraint of evacuating the power to the Southern region from other regions," said the statement by the Union power ministry post bidding process.

Previously, in the e-auction held on May 2016, bidders quoted zero bid per unit, which meant that the players were ready to forgo subsidy given by the government.

Till now, 22,304 Mw of gas-based power plants have received gas supply and have participated in the bidding process. The three rounds were held in June 2015, March and May 2016, respectively.

Under the new gas mechanism announced last year, every stakeholder in the supply chain would have to forgo a part of their returns on operations. While the central government would give up the service tax it levies on gas sourcing, the power plant operators would forgo return on equity. GAIL would source the imported gas and along with Gujarat State Petronet Limited would forgo 50 per cent of their transmission rate and 75 per cent of marketing margin in supplying imported RLNG.

The lead banker to these plants would ensure all receipts of money would be utilised only for payments towards the variable cost of generation (fuel cost) and the operation and maintenance expenses in accordance with regulatory guidelines. Debt servicing would be made after capping fixed cost.

Of the 24,150 Mw of gas grid-connected power generation capacity in the country, 14,305 Mw has no supply of domestic gas. On this front, an investment of about Rs 60,000 crore is at the threshold of becoming a non-performing asset. The remaining capacity (9,845 Mw), involving an investment of about Rs 40,000 crore, is working at a sub-optimal level, based on the limited quantity of domestic gas in India.

Source- Business standard


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