The ministry of power has rejected a proposal to pool the prices of domestic and imported gas on the ground that it will make the cost of electricity unviable to industries. In March, the Planning Commission had recommended to the Prime Minister's Office that owing to short domestic supply, the fertiliser and power sectors should bear the burden of higher-priced imported gas.
It had proposed pooling ratios of 48:52, 54: 46 and 61:39 for domestic and re-liquefied natural gas.
At current prices, this would have meant the cost of power generated soared by at least 50% to Rs 6 -- and to as high as Rs 7.25 per unit -- from around Rs 4 now, according to the ministry's estimates.
Therefore, in its note prepared for the Cabinet Committee on Investment, the ministry, led by Jyotiraditya Scindia, rejected the proposal.
Currently, the fertiliser and power sectors get 29.4 and 17.5 million metric standard cubic meter per day of gas, respectively.
A drastic decline in production of gas from the Krishna-Godavari D6 block operated by Reliance Industries has meant intermittent supplies to power plants over the last two years.
The flow even came to a standstill in March.
The ministry note said the present variable cost of gas-based power plants is about Rs 2.8 per kilowatt hour (Kwh), while the fixed cost is Rs 1.2 per Kwh at 70-75% PLF, which rises to Rs 1.7 per Kwh if the PLF falls to 50%.
A 1000 watts make one kilowatt.
The ministry also expressed apprehension that states would criticise pooling since it would lead to the public sector subsidising the private sector. States had earlier opposed a similar proposal for pooling the prices of imported and domestic coal.