NTPC, Lanco quote winning bid in LNG subsidy auction

NTPC and Lanco were among the three companies which quoted the lowest bid of Rs 1.42 per unit for availing of subsidy on imported gas to run 14 stranded power projects across the country, in the first ever auction that saw fierce bidding. The bidders were asked to quote subsidy in rupees per unit so that they can generate and supply power at <g data-gr-id="47">maximum</g> of Rs 5.50 a unit. The lowest bidders would get <g data-gr-id="46">subsidy</g>. As many as 14 power projects technically qualified to participate in the auction for receiving <g data-gr-id="45">subsidy</g> on imported LNG for restarting stranded gas-based power plants. 

Sources said Lanco, NTPC (along with GAIL for Ratnagiri power project) and a third company quoted the lowest bid of Rs 1.42 per unit. The name of the third company could not be obtained. Of the remaining seven bidders, six submitted <g data-gr-id="43">financial</g> bid of Rs 1.44 per unit and one Rs 1.45 per unit.

 Producers seeking the lowest subsidy will win the first right over 8.9 million standard cubic meters per day of imported gas on offer at reduced prices. In all 14 plants, with a combined power generation capacity of 8,108 MW, were technically qualified to participate in the first round of reverse e-auction where bidders were asked to quote subsidy in rupees per unit they need so that they can generate electricity at maximum of Rs 5.50 a unit.

The auction started at a base price of Rs 1.74 per unit considering a plant load factor (PLF) or capacity utilisation of 35 <g data-gr-id="56">per cent</g> of the installed capacity and after four rounds the subsidy sought had come down Rs 1.47 per unit, according to the e-auction data available. The identity of bidders was not immediately disclosed with officials saying winners will be announced at the end of the auction. As many as eight bidders submitted bids till the end of four rounds, they said, adding that <g data-gr-id="52">auction</g> is still in progress. The 8,108 MW of power plants, which currently do not receive any gas and are stranded, will entail a subsidy outgo of Rs 792 crore, said R N Choubey, Special Secretary in the Ministry of Power. “There shall be no problem selling the power as the distribution companies have already signed purchase agreements with the bidders,” he said. After stranded power plants, 1.1 <g data-gr-id="57">mmscmd</g> of gas will be offered to plants that are receiving gas from domestic fields but at sub-optimal levels.

State-owned gas utility GAIL India Ltd and Gujarat State Petroleum Corp (GSPC) have been designated importers of liquefied natural gas (LNG), whose delivered price will be reduced by asking importer and transporter to take a <g data-gr-id="49">hair cut</g> in marketing and operational cost. The government will provide as much as Rs 3,500 crore in financial support to the power plants this fiscal and another Rs 4,000 crore in the next, officials said. Choubey said the current round of bidding is for 8.9 <g data-gr-id="50">mmscmd</g> of gas required to start the stranded gas-based plants during the June-September period of this year. Gas-based power stations, which are either shut for want of fuel or are receiving some domestically produced gas and running at sub-optimal levels, are eligible for subsidy to help them buy costly imported liquefied natural gas (LNG).

As many as 31 power stations with a combined capacity of 14,305 MW which are languishing due to want of gas can bid for support from the Power System Development Fund (PSDF) for generating 30 per cent of their installed capacity, called plant load factor, using imported LNG. Another 23 plants are currently getting inadequate supplies from domestic fields. 

Gas-based plants which were idling for want of gas between April 2014 and January 2015 are eligible to bid for govt support in the auction. The 14 projects which have qualified to bid in the first round of auction are: GMR Kakinada, GMR Vemagiri, Vemagiri CCPP (combined cycle power plant), Dhuvaran CCPP, <g data-gr-id="42">Utran</g> CCPP, Gautami CCPP, Jegurupadu CCPP, Konaseema CCPP, Kondapalli Extn CCPP, Ratnagiri, RVK Energy, Kashipur Sravanthi, DGEN Mega CCPP, UNOSUGEN CCPP. Out of gas-based generation capacity of 24,150 MW in the country, 14,305 MW capacity projects are stranded.