NTPC, Torrent, CLP, GSEB win LNG subsidy auction

Fuel-starved power producers NTPC, Torrent, CLP India and Gujarat State Electricity Board on Wednesday won subsidies that will help them buy costlier imported gas (LNG) to boost electricity generation. A day after 10 power plants, mostly of private sector, won government subsidies that will help them restart stranded stations, the four won support to raise electricity generation at their units that were crippled due to sub-optimal domestic gas supplies.

In all, eight power generators bid in the tender of 1.1 million standard cubic meters per day of imported gas (liquefied natural gas) in the second and final phase of the reverse auction conducted by the Power Ministry. This will involve government support of Rs 119.99 crore from the Power System Development Fund. The government offered a maximum of Rs 2.06 per unit subsidy to help them produce electricity at no more than Rs 5.50 per unit using imported LNG, whose indicated <g data-gr-id="51">ex-port</g> price was $8.5 per million British thermal unit (delivered price of $9-9.5 per mmBtu).

Companies were asked to quote subsidy they need to generate electricity at that rate and those quoting the lowest walked away with the gas. The auction ended with the lowest price bid of Rs 1.75 per unit, according to auction information available. The four bidders have 4,871 MW of electricity generation capacity that currently is running at sub-optimal capacity because of domestic gas scarcity. The auction concluded with only a single participant submitting the lowest price bid of Rs 1.75 per unit, according to the auction details. Of the remaining four bidders, three submitted the financial bid at Rs 1.96 per unit and one at Rs 1.97 per unit. The auction started at a base price of Rs 2.06 per unit, considering a plant load factor (PLF) or capacity utilisation of 35 <g data-gr-id="40">per cent</g> of the installed capacity. About 1.1 <g data-gr-id="41">mmscmd</g> of gas has been offered to plants that are receiving gas from domestic fields but at sub-optimal levels.

The country’s largest power producer, NTPC will now receive subsidised gas for its Auraiyya and Dadri plants, the auction information said. These projects have been allocated 28.41 million standard cubic metres (MMSCM) and 2.08 MMSCM with PSDF (Power System Development Fund) support of Rs 1.96 per unit for the period June 2015 to September 2015.

CLP India Private Limited will receive 32.86 MMSCM, Gujarat State Electricity Corp (11.61 MMSCM) and Torrent Power will receive 58.77 MMSCM of gas. Overall, 31 power stations with a combined capacity of 14,305 MW are languishing because of want of gas. They 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 Liquefied Natural Gas. On Tuesday, power companies bid aggressively for receiving <g data-gr-id="49">government</g> subsidy to import LNG to restart stranded gas-based plants with the lowest price bid of Rs 1.42 per unit. These five power plants will generate 644 million units of electricity which will be supplied at or below Rs 3.39 per unit to the purchaser Discoms during the peak summer months from June 1 to Sept 30, 2015.

The grid connected gas based power generation capacity in the country is 24,150 MW. Of this, a capacity of 9,845 MW had <g data-gr-id="48">supply</g> of some domestic gas and is currently operating at an average PLF of 32.2 per cent. These comprise 23 plants of which only 6 plants have a PLF higher than 35 per cent. <g data-gr-id="46">Thus</g> 17 plants with a PLF of less than 35 <g data-gr-id="42">per cent</g> were eligible to participate in the auction process <g data-gr-id="45">held  today</g>. Auctions held on Tuesday and Wednesday have resulted in <g data-gr-id="43">revival</g> of a cumulative gas based generation capacity of 10,270 MW resulting in <g data-gr-id="44">generation</g> of additional 5.70 billion units of electricity. Further, this will involve government support of Rs 843.99 crore from the Power System Development Fund to the Discoms.