Power minister asks CEA for list of power plants needing gas

The ministry of power has initiated the process of finalising the list of prospective power plants that may get gas in the 12th Plan period, based on the new criteria set for the gas allocation policy.
The ministry has asked the Central Electricity Authority (CEA) to keep in mind the shortage of gas in the country while preparing the list.

According to the new policy framework, the government will provide only 60% of the total requirement of the plants coming up in the 12th Plan period.

The final supply of gas would be started only after the developer provides a power purchasing agreement (PPA) to the extent of capacity corresponding to 85% of the domestic gas allocated.

“The new policy is directed at bringing down the tariffs in the case of gas-based power plants, as the power developer will have to sign a five year power purchasing agreement to be eligible to get gas,” said Rupesh Sankhe, analyst with Angel Broking.

The policy seeks to earmark 52 % of the gas for government-owned firms such as NTPC, while SEZ and Delhi-Mumbai Industrial Corridor Development Corporation would be allocated 4% each.

The independent power producers have been given a quota of 30% from the 12th Plan gas allocation, while 5% of gas would be allocated to captive power plants.

In the new policy, the location of the power plant will matter a lot, as plants near the gas pipeline will get preference over others.
The developer of the power plant will have to furnish the report of the expert appraisal committee of the Ministry of Environment and Forest.

“The new criteria set by the power ministry for allocating gas seem to benefit new power players for whom the criteria have been made easy. Earlier the gas used to be allocated only to those plants that were nearing completion, but now on the basis on PPA a plant becomes eligible for gas allocation,” said Kuljeet Singh, partner-infrastructure practice, Ernst & Young.