New policy gives Rs 7500cr lifeline to stranded power plants for 2 yrs - Times of India

The author has posted comments on this articleTNN | Mar 27, 2015, 01.06AM IST

NEW DELHI: The new gas policy framework caps the subsidy from Power System Development Fund at Rs 3,500 crore in the first year and Rs 4,000 crore in the second year to make costlier imported fuel affordable for stranded gas-fired power plants with a combined capacity of over 4,000 mw.

The policy, approved by the CCEA on Wednesday, would be in place for two years before it comes up for review in line with the oil ministry's projection on availability of additional gas from domestic fields.

Power secretary P K Sinha on Thursday said the policy does not imply any price pooling and would apply only to incremental consumption of liquid gas imported in ships from spot markets for reviving the stranded capacity. GAIL would import spot cargos of liquid gas on the basis of approved requirement projected by the plants. He said in the reverse bidding, units would have to indicate the volume of gas they require and the quantum of support they seek on each unit of power proposed to be generated by operating at 30% of capacity, which would remain fixed for bid tenure. The plant seeking the lowest support would be at the top of the list.

The scheme would play within the perimeter set by the cap on subsidy and tariff - Rs 5.50 a unit - and the baseline plant load factor of 30%. The rate quoted by a unit would be valid for the term of the bid and any fluctuation in spot liquid gas prices would be covered by the PSDF within the cap.

The lead banker for each of these projects will do the financial monitoring and no money from PSDF will flow directly to the promoters. The subsidy will be paid to discoms, who will deposit their payments into a Trust and Retention Account, where lenders will have the first right on the revenue for servicing debt. The promoters will get only the operating cost and have to forego returns on investment.

A proposed empowered panel with representatives of power, oil and finance ministries as well as central power sector watchdog will monitor the scheme's operation and bidding. Other stakeholders too have decided to take a haircut. The Centre will forego the 12% service tax on regassification of liquid gas, while import terminal operator will sacrifice 50% of regassification charge, estimated at 75 cents per unit of volume.

GAIL will sacrifice 75% of marketing margin, pegged at 13 cents or so, and 50% of transportation charge, which can go up to $1.50, depending upon the distance gas is carried from the import terminal. States will also give up applicable levies on the incremental gas wheeled to the stranded plants.

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