Power projects may be able to tap cheap gas, says minister

Falling prices of natural gas could make it affordable for power producers, power minister Piyush Goyal said ahead of the next round of concessions for gas-based power projects.

He expects prices to fall further in the next round of subsidy-based auction of gas for power projects, given the softening of global rates and muted electricity demand in the country.

With distribution companies buying cheaper electricity on a short-term basis from the spot market, power producers are unable to sell power, which makes for a strong case for the bids to be even more favourable for the government, he said.

Also, in an attempt to kick-start stranded gas-based projects, the government has introduced subsidy-based auctions to import gas and supply it to these power units.

Lower prices for gas would translate into a lower subsidy burden for the government. "The fourth round of bids will start soon and we are looking at the possibility of even lower prices given that the international gas prices are much lower than what they were one-and-a-half years back when we formulated the scheme, Goyal said, adding, ''The appetite for expensive power is not there."

Goyal said in the third round of bids that concluded earlier this year, none of the nine participants sought subsidy support, resulting into a savings of Rs1,600 crore for the government.

"We are striving to transform India from a power-deficit nation to a power-surplus nation,'' he said, adding, ''Not only that there must be sufficient power, it must be affordable" as well, he said at the Motilal Oswal investor conference in Mumbai on Tuesday.

The minister said the UDAY (Ujwal Discom Assurance Yojana) scheme for reviving beleaguered discoms has been a game-changer. While there is still time before one can see substantial improvement on the ground, the benefits of the scheme are already visible on the financial side, he said.

"The results are encouraging and states are serious about implementing it." If all states implement the scheme efficiently, it will benefit the country by $25-26 billion every year in terms of the savings, he said. Goyal said the government is determined to remove roadblocks to achieve the target of 24x7 power to all and that the units of power generated in the country could double in the next five-six years on the back of better efficiently and capacity addition.

"By merely utilising existing capacity efficiently, India can enhance power generation by 50 per cent," he added.

Meanwhile the petroleum ministry has decided to extend the benefits under Pradhan Mantri Ujjwala Yojana to the people of all hilly states, including North-East states by treating them as 'Priority States' and by releasing LPG connections to eligible beneficiaries.

This will effectively address the difficulty faced by poor people residing in the states of Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Sikkim, Assam, Nagaland, Manipur, Mizoram, Arunachal Pradesh, Meghalaya and Tripura in accessing LPG for cooking purposes.

Pradhan Mantri Ujjwala Yojana aims to provide deposit-free LPG connections to BPL households as a clean fuel solution. So far, more than 50 lakh connections have been released to the beneficiaries.