Power plants excluded from gas price pooling

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Government has approved several relief measures such as exclusion of projects receiving gas under the administered pricing mechanism (APM) from pooling and a financial package to benefit plants worth Rs 1.2 trillion stranded due to shortage of fuel.

In a meeting to discuss gas price pooling for the power sector, it was decided that the ministry of power will evaluate its impact and possible ways to meet the revenue gap arising from it, sources said.

The government will exclude those gas-based plants which are currently receiving APM gas from pooling. The price of gas under the APM is set by the government.

Private power producers had pitched for pooling the price of domestic as well as imported gas as it would help re-start power plants worth Rs 1,20,000 crore that are currently lying idle.

Banks will help in providing a relief package for gas-starved power plants and enable them to tide over current shortage for three years, sources said.

The entire gas-based power capacity of 24,149 mw constitutes an investment outlay of more than Rs 1,20,000 crore, according to private generators.

The meeting, held by the prime minister's office (PMO) on Wednesday, was attended by the secretaries of power, petroleum and natural gas, revenue and expenditure.

Power projects may also be given relief in the form of removal of import duty on LNG (liquefied natural gas) and also scrapping of VAT (value-added tax).

They may be asked to keep the plant load factor (efficiency of the plant) at 40 per cent of the total capacity.

States may be incentivised to join pooling through an appropriate incentive, including possible funding from National Clean Energy Fund (NCEF).

Going forward, PMO has also asked the power ministry to prepare another proposal on similar lines, which will include all plants receiving APM gas, to be submitted next week.

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