Photo: AFP
Photo: AFP

Bidding starts for imported LNG subsidy; 16 power companies in fray

The auction started at a base price of Rs1.45 per unit

New Delhi: As many as 16 power companies including NTPC, GMR and GVK on Tuesday began bidding to get government subsidy support to buy imported LNG for restarting their stranded electricity generating stations.

For the auction of subsidy support, 16 bidders have been technically qualified, sources said. Power producers bidding for the lowest subsidy support, will get the first right over the fuel. The auction started at a base price of Rs1.45 per unit.

“The plant load factor (PLF) for SGP will come at 35% which can go up to 50% in the increment of 2.5% per round," the source said. The auction for plants receiving Domestic Gas (DGP) will be held tomorrow and “11 bids have been technically qualified for it".

According to sources GMR, GVK, NTPC and Lanco were among the companies that had submitted bids earlier this month to be qualified for the second phase of auction of financial assistance of Rs2,600 crore under Power System Development Fund set up by the government.

“The maximum bidding price under the reverse auction has been fixed at Rs4.7 per unit for stranded gas based plant (SGP) and Rs3.39 per unit for domestic gas plants (DGP)," the source had earlier said, adding that the firms will bid for a total of 15Million Metric Standard Cubic Meter Per Day (MMSCMD).

Power ministry had invited technical bids to undertake the reverse auction of the PSDF support to eligible gas-based power plants for a period from 1 October 2015 to 31 March 2016, as per the tender.

Under the plan, liquefied natural gas (LNG) will be imported and cash-strapped state power distribution companies will be financially supported to buy electricity from them.

Power plants rarely use costly imported LNG as electricity produced from the fuel would cost much more than that from a domestic coal-fuelled plant or a domestic gas-fired plant, and there would be no takers for such expensive power.

In the first round, 15 projects were shortlisted through a so-called reverse e-bidding process for supply of electricity to distribution companies that was conducted by state-owned MSTC Ltd. The successful bidders will be given Letter of Award on 17 September.

In the May auction, subsidy support helped revive a cumulative gas-based generation capacity of 10,270 MW resulting in generation of additional 5.70 billion (bn) units of electricity during June to September summer.

In the first round, government provided a subsidy support of Rs843.99 crore from the Power System Development Fund to the discoms.

Earlier in May, government revived 10 stranded gas-based power projects under the PSDF scheme. These plants had successfully bid through reverse e-auction process for generating 5.05 bn units of electricity which will be supplied at or below Rs4.70 per unit to the purchaser discom during the peak summer months of 1 June 2015 to 30 September 2015, the power ministry had earlier said in the release.

Further, this involved the government support of Rs843.99 crore from the Power System Development Fund to the discoms. The reverse e-auction for the stranded gas based plants was conducted under the newly approved scheme for utilisation of stranded gas based generation capacity.