Financially stressed power firms seek subsidy scheme for gas-based power

NEW DELHI:  With a large number of power generation companies facing significant financial stress as dues from discoms continue mounting, industry association Association of Power Producers (APP) has sought the reintroduction of an earlier subsidy scheme for gas-based power projects. The APP also sought a dedicated auction or allocation of natural gas for the power sector alone.

In a letter sent to Union power minister R K Singh last week, APP said, with “global gas prices again on the upswing, we recommend the reintroduction of a modified E- RLNG scheme for the overall benefit of the sector, which was the initial idea behind the introduction of the E-RLNG scheme”.

The scheme mentioned, E-RLNG, was an electronic gad auction system to improve the plant load factors of stressed gas-based power plants that first introduced in 2015. However, it was discontinued two years later since a haircut had to be taken by all the stakeholders to make imported gas competitive compared to other sources of fuel.

The APP said that the scheme had worked to improve the PLFs of such plants, a metric that has subsequently crashed to around 22 per cent due to the limited supply of gas. The new scheme could also have exemptions such as a 50 per cent reduction on pipeline tariff charges, a 75 per cent reduction on marketing margins, and a 50 per cent reduction on regasification charges.

“It may be recalled that many pipeline operators were willing to provide 50 percent reduction in their tariff since most of the pipeline utilization were not more than 40 to 45 per cent,” APP stated in the letter.