Gas price pooling proposal to be reworked: Power Secretary

Gas price pooling proposal to be reworked: Power Secretary

The proposed ‘gas price pooling’ mechanism for power plants will need to be reworked as the Petroleum and Natural Gas Ministry has communicated to the Power Ministry that additional gas cannot be given till 2016-17.

“We are reworking the gas price pooling proposal since the Ministry for Petroleum and Natural Gas said there is no additional gas available,” PK Sinha, Secretary, Ministry for Power, said on Friday. To facilitate the proposal, GAIL (India) had agreed to cut its marketing margin. “Assam and Gujarat have agreed to exempt VAT but we cannot go ahead with the proposal as we do not have gas,” Sinha added.

Pooling is deriving an average price for gas produced from all domestic sources. At present, there are several gas pricing regimes in the country — administered pricing mechanism, market-determined price based on pricing schedule and guidelines issued by the Government, gas sold on formula approved by the Government, price derived at arm’s length principle, and pricing under the production-sharing contract regime. The gas price pooling for power plants was also expected to have an element of imported gas. Almost 16,000 MW of gas based power capacity is stranded due to lack of fuel availability.

Pooled pricing would have allowed power plants which cannot buy costlier LNG to source fuel at an average rate. This would have enabled the stranded plants to function and operational plants to improve their plant load factors.

According to the Central Electricity Authority’s latest figures, gas-based power plants in the country have been operating at a plant load factor of 21.68 per cent in April-December 2014 while coal-based power plants have operated at 64.78 per cent in the same period.

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