The Narendra Modi government on Tuesday has ruled out any subsidy scheme for the ailing power plants in the country. India has about 25,000 MW gas-based capacity, which is impacted due to gas unavailability but 14,305 MW is completely stranded for want of gas.
According to SC Garg, power secretary, “We cannot subsidise gas-based power plants. Gas prices are at a low and much lies in the hands of the gas-based power companies.”
Of the 31 stranded gas-based power plants, 24 plants are of the private sector, six of state government and one of the central government company. Investment in the stranded power projects run into Rs 65,000 crore of which 70 percent is funded by the public sector banks.
“Since stranded gas-based capacity involves a significant amount of public money, it cannot be allowed to become junk. The committee believes that efforts should be made to ensure these plants remain an asset to the country. The Committee recommends that the government should hand-hold these stranded gas-based power plants and provide the requisite support so that they can come out of stress,” said the Standing Committee on Energy in its report which was submitted in January this year.
The standing committee also stated that with an increase in renewable energy sources, which is also intermittent in nature, gas-based power will provide a spinning reserve during peaking power demand situation and also help balance the grid.
“National Clean Energy Fund (NCEF) was created out of cess on coal at Rs 400 per tonne to provide financial support to clean energy initiatives and an inter-ministerial group chaired by the finance secretary was constituted to approve the project/schemes eligible for financing under NCEF.
The committee feels that this fund should be used for its intended purpose i.e. to support clean energy initiatives and it should not be diverted to compensate GST losses. Diversion of this fund to unrelated activities reflects poorly on our commitment towards a cleaner environment and shows the government's apathy towards clean energy projects" cited the Standing Committee report on Energy.
In 2015, power ministry had introduced a subsidy based e-bid scheme for importing gas from spot market for the stranded gas-based power plants, which was then discontinued in 2017 as states refused to sign PPAs (Power Purchase Agreements) and extend waivers required for the scheme.India's dependence on LNG (Liquified Natural Gas) import stood at 47.8 percent in FY19, which was worth $10.3 billion while produced only 26,039 MMSCM in the same financial year.