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Home News Power Sector News LNG based power plants may come to grinding halt

LNG based power plants may come to grinding halt

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KG-D6The country's gas-based power capacity may come to halt from April 1 when domestic natural gas prices would double as nothing as moved on the subsidy front which the government had promised power producers to meet increased costs.

Under the Rangarajan Committee formula, the government has notified domestic gas prices at $8.4 million metric British thermal unit (mmBtu) from April 1, double the current $4.2. If the subsidy doesn't come by that time, it will lead to shooting up of electricity prices from such plants, making it prohibitively expensive for state distribution companies which are the main buyers of such power projects.

Investments of Rs 100,000 crore in gas-based plants by NTPC, the state-owned biggest power producer, and private players like Lanco Infratech, GVK and GMR Infrastructure and Torrent Power are in a fear of turning non-performing assets.

"The proposed gas price increase will add Rs 2-2.5 per unit (of electricity). If at $4.2 (Rs 260) per mmBtu we are finding it difficult to sell power, at the proposed price it will be impossible to sell gas-based power," Arup Roy Choudhury, chairman and managing director, NTPC, said.

According to him, at present, almost 1,800-1,900 mw gas-based power is not being requisitioned and NTPC has put on hold capacity addition of about 4,000 mw in the gas-based power plants set for the 12th Plan.

An NTPC official said that discoms of Maharashtra, Gujrat and even Delhi refuse to buy power from gas-based plants at the current price.

At present, producing power from domestic gas costs between Rs 4.5 and Rs 5.5 per unit. Even the cost of power from imported coal is a high of around Rs 3.5 per unit.

Ashok Khurana, director general, Association of Power Producers. says a hike of $1 in the gas prices increases the cost of gas-based power by 50 paise per unit. "Power produced from gas above $5 per mmBtu is simply unsaleable in the Indian power market. Until the government comes out with a solution for the gas based power plants."

Khurana said in 2009, when gas was available from KG-D6 basin, the gas-based power plants were operating at a plant load factor of 50-55%. But today the sector is getting just 9 million metric standard cubic metres per day of gas and the average PLF for gas-based power plants has come down to 15.20%.

"Gas-based power plants operate only at peak time when there is demand for expensive power," said Khurana.

According to a Planning Commission official, when the government had proposed increasing of gas prices in the country, the finance ministry was considering providing subsidy to the power sector. However, due to fiscal constraints the issue has taken a backseat and there is no possibility in the near future of getting any bailout.

Source- DNA


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