The government has made it obligatory for power producers to commit their entire generation to grid-connected distribution companies to be eligible for allocation of gas from blocks allocated under the New Exploration Licensing Policy (NELP).
The decision was made at a meeting of the empowered group of ministers (EGoM), minister of state for power Jyotiraditya M Scindia informed the Lok Sabha today.
Accordingly, all existing and future allocations of NELP, gas-to-power plants will be subject to the condition that the licensee sells the entire electricity produced from the allocated gas to distribution licensees at tariffs determined or adopted (in case of bidding) by the tariff regulator of the power plant.
The gas will be supplied only for the duration of the power purchase agreement (PPA) and supply of gas will start only after the signing of PPA.
The PPA may be initially for one year (short term PPA) during which electricity will be sold at tariff determined by the regulator and the subsequent PPA should be for medium or long term.
The EGoM also authorised the ministry of petroleum and natural gas (MOP&NG) to cancel the current allocation of any power plant(s) not complying with these conditions.