More than half of gas-based power plants ‘stranded’

‘Hit by lack of adequate gas supply’

More than half of India’s 25 Giga Watt (GW) of gas-based power plant capacity is ‘stranded’ or unutilised and 10.6 GW of this requires immediate attention, the Union of Ministries of Power and Finance revealed in a presentation during a meeting of the Standing Committee on Energy last week.

The presentation, reviewed by The Hindu, said that one of the major reasons for these plants being unutilised is that they were built based on the assurance by the government of an adequate supply of gas, which did not materialise.

“In the earlier e-RLNG [regasified liquefied natural gas] scheme, the CEA [Central Electricity Authority] has identified about 14 GW capacity as stranded,” the report said.

“Around 10.6 GW is completely stranded as either these plants have no PPA [power purchase agreement] or [are] having PPA but not earning/earning fixed cost.”

In other words, 10.6 GW worth of capacity is either not even meeting its fixed costs, or just meeting its fixed costs.

The report found that the reason for the shortage of gas supply to these power plants is due to the government’s inability to ensure an adequate supply, despite its assurances to the power plants.

It said that in the 11th Five Year Plan, the Ministry of Power had finalised a plan to add 78,800 MW of generation capacity and encouraged the setting up of gas-based power plants to fulfil this on the basis of their shorter gestation periods, and also based on the assurance of by the Ministry of Petroleum and Natural Gas of an ‘adequate quantity of domestic gas’.

‘Technical problems’

“New plants of 9,000 MW capacity were planned and accordingly IPPs [Independent Power Producers] have built these plants based on the government’s plan to allocate gas as and when commissioned,” the report said. “RIL Gas was forecasted to produce around 120 mmscmd, however it started depleting and touched 60 mmscmd in 2013.”

According to sources, several opposition members questioned the team of bureaucrats on why there is a dip in production of gas by the Reliance-owned portion of the KG Basin.

They wanted to know if the plant has deliberately reduced the production to ‘hoard’ to get better prices. The government said that the production has dipped due to technical problems as per a report filed by RIL Gas.

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