Indian Government to Revive 16-Gigawatt Stalled Gas Fired Power Projects

---

Researched by Industrial Info Resources India (Delhi, India)--The Government of India is mulling over a revival package to kick-start 16-gigawatt (GW) gas-fired power projects that are left redundant after an investment of about $10.38 billion, by providing fuel and subsidy to make them financially viable.

The plan proposes diversion of additional production of gas, above the current level of the country's output, to the stalled power stations. The extra gas would be pooled with imported Liquefied Natural Gas (LNG).

As LNG costs about $15 million metric British thermal units (MMBTU), compared with the prevailing domestic gas rate of $4.2 MMBTU, the government plans to provide subsidy to reduce the cost of electricity generation. The subsidy would aim at ensuring that the gas based electricity is sold at 9 cents per unit. The rescue package has been prepared by the oil and power ministry jointly. The coal cess deposited to National Clean Energy Fund (NCEF), will be used to subsidize the gas power plants.

The subsidy is to be provided in the states where Value Added Tax (VAT) and Central Sales Tax (CST) have already been exempted on the natural gas. The package also includes scrapping all the taxes on domestic and imported natural gas consumed by power companies.

Last year, an Empowered Group of Ministers (EGoM) had decided that gas-based power plants will be given preference till 2015-16 in allocating additional gas output from National Exploration Licensing Policy (NELP)-blocks after meeting the 31.5 million metric standard cubic meters per day (MMSCMD) requirement of fertilizer units. The power sector will be given priority in allocation of incremental gas from blocks awarded under the NELP till 2018-19.

The package also includes the plan to seek an extension of the EGoM directive by another three years from 2015-16. Total incremental gas output including non-NELP sources is estimated to be around 50 MMSCMD. Data with the oil ministry shows availability of 4.53 MMSCMD, additional gas output for the next fiscal from NELP fields, 13.30 MMSCMD in 2016-17, 18.19 MMSCMD in 2017-18 and 28.74 MMSCMD in 2018-19.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.