The government is planning to allow gas-powered projects to import the fuel and pass on the incremental costs as higher charges. The plan, similar to the one being worked out for coal-based power projects, is in the initial stages and will help stranded gas-fuelled power generation capacity languishing in the country, thereby boost the flagging economic growth.
The cabinet committee on economic affairs on 22 April asked the ministries of coal and power to draft a proposal within three weeks that allows for the pass-through of the additional fuel costs. This also comes at a time when an empowered group of ministers (eGoM) is to consider a revision in gas prices based on the recommendations of C. Rangarajan, chairman of the Prime Minister’s economic advisory council, according to whose formula the new price will be around $8.4 per million British thermal units (mmBtu). The current price of domestic gas in India ranges between $3.5 and $5.73 per mmBtu. Imported natural gas costs around $14 per mmBtu.
In addition, the power ministry is also working on a so-called peaking power policy for gas that will encourage power distribution companies (discoms) to invite bids from generation utilities for meeting power shortages during peak consumption hours—normally between 8am and 11am and 6.30pm and 10pm. The power ministry has also asked eGoM to consider power plants in the priority sector for gas allocation.
