 "Power plants stare at Rs 46,360 cr annual burden over gas price norms")
New Delhi: Petroleum ministry’s proposal to raise natural gas prices by at least 60 percent will result in more than doubling of electricity tariff and a whopping Rs 46,360 crore per annum impact on power plants.
The ministry in a note to the Cabinet Committee on Economic Affairs (CCEA) has proposed to price domestically-produced natural gas as per a complex international hub and imported LNG based formula suggested by the Rangarajan Committee.[caption id=“attachment_845437” align=“alignleft” width=“380”] Tariff hike? Reuters [/caption]
The price as per the formula in the current quarter comes to $6.775 per million British thermal unit as against the current rate of $4.2 per mmBtu.
Sources said the ministry in the note to the CCEA has proposed revision in gas prices every quarter, which would mean that electricity tariffs for consumers would change once every three months.
While the revised rates would apply to state-owned gas producers immediately, the same for Reliance Industries would be applicable from next due date or into effect from 1 April 2014. The price of gas as per the formula then would be in excess of $8.
The ministry, sources said, in the note states that the variable cost of generating electricity at the 2014 gas prices would be around Rs 5.40 per kilowatt hour (per unit), taking the total cost of generation to around Rs 6.40 per unit.
Impact Shorts
More ShortsThe cost of electricity generation at delivered price of $6.93 per mmBtu for RIL’s KG-D6 gas (base price plus taxes and transportation), comes to Rs 2.93 per unit, they said adding the note incorporates Power Ministry’s comments that the generating electricity at Rs 6.40 per unit is not viable.
The note states that the nation has 18,000 MW of gas-based power plant, 30 per cent of which are stranded for want of fuel. Another 1000 MW gas based power plants are at advanced stage of commisioning.
With the cost of every dollar increase in gas price assuming that the delivered price increases to $1.3 per mmBtu, the impact on power sector will be about Rs 6,450 crore, the note states. At 2014 gas price, the impact would be Rs 46,360 crore per annum.
The power ministry, the note states, has opioned that base price of domestic gas beyond USD 5 per mmBtu was unviable for power sector.
The current price of $4.2 translates into a delivered price of $5.3 to 6.93 for consumers after including sales tax, margin and pipeline transportation charges. At base price of $8 in 2014, RIL’s KG-D6 gas will cost $9.5 to consumers in Andhra Pradesh, $10 in Maharasthra and Gujarat and $10.83 in northern India.
PTI
 "Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?")
 "As Russia pushes east, Ukraine faces mounting pressure to defend its heartland")
 "Why Mossad was not on board with Israel’s strike on Hamas in Qatar")
 "Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe")
 "Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?")
 "As Russia pushes east, Ukraine faces mounting pressure to defend its heartland")
 "Why Mossad was not on board with Israel’s strike on Hamas in Qatar")
 "Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe")
