Free Press Journal

Power producers in fierce bidding for gas subsidy


New Delhi: Power producers, including GMR, Torrent, GVK and Lanco Infratech, today put in aggressive bids at the auction for government subsidy to be used for buying imported natural gas to restart their stranded electricity generating plants. Producers seeking the lowest subsidy will win the first right over 8.9 million standard cubic meters per day of imported gas on offer at reduced prices.

In all 14 plants, with a combined power generation capacity of 8,108 MW, were technically qualified to participate in the first round of reverse e-auction where bidders were asked to quote subsidy in rupees per unit they need so that they can generate electricity at maximum of Rs 5.50 a unit.

The auction started at a base price of Rs 1.74 per unit considering a plant load factor (PLF) or capacity utilisation of 35 per cent of the installed capacity and after four rounds the subsidy sought had come down Rs 1.47 per unit, according to the e-auction data available.

The identity of bidders was not immediately disclosed with officials saying winners will be announced at the end of the auction.

As many as eight bidders submitted bids till the end of four rounds, they said, adding that auction is still in progress. The 8,108 MW of power plants, which currently do not receive any gas and are stranded, will entail a subsidy outgo of Rs 792 crore, said R N Choubey, Special Secretary in the Ministry of Power.

“There shall be no problem selling the power as the distribution companies have already signed purchase agreements with the bidders,” he said. After stranded power plants, 1.1 mmscmd of gas will be offered to plants that are receiving gas from domestic fields but at sub-optimal levels.