Alleging Ratnagiri Gas And Power Getting Undue Favours, Private Firms Write To PM Narendra Modi

Alleging Ratnagiri Gas And Power Getting Undue Favours, Private Firms Write To PM Narendra Modi

A section of beleaguered gas-based power producers has written to Prime Minister Narendra Modi against the special favours being given to Ratnagiri Gas and Power (RGPPL) — previously Dabhol Power. In the letter, reviewed by FE, these firms sought a “level-playing field for all gas-based power plants and not single out (the incentives) for operationalisation of Dabhol”. The section of the industry alleges that RGPPL’s continuing 550 MW power supply to the Indian Railways, even after the expiry of the “scheme for operationalisation of stranded gas-based power plants”, without any tender or bidding mechanism is not in line with edicts of the Electricity Act, National Tariff Policy and the provisions of other similar regulations.

The letter states that the tariff of Rs 5.5/unit at which RGPPL is selling power to the railways is “abnormally higher” than the prevailing market prices, especially at a time when private players are finding it difficult to get state electricity distribution companies (discoms) to buy gas-based power at Rs 4.7/unit. In 2015, the government had announced a transient mechanism where gas-based power plants could run at 30% plant load factor with assured supply of gas, but subject to a tariff cap of Rs 5.50/unit. Under the mechanism, the operators of gas-based power units received monetary support from the government so as to be able to service their debt while forgoing their return on equity.

These included exemptions from certain taxes on the incremental RLNG being imported for the gas plants. Gas transporters and re-gasification terminals had also agreed to reduce their transportation tariff, marketing margin and re-gasification charges on the incremental RLNG. The scheme was discontinued from April 1, with four reverse e-auction being conducted in two years.

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Gas plants with a capacity of 14,305 MW are stranded in the country for scarcity of natural gas, representing an investment of over Rs 60,000 crore, and at the threshold of becoming non-performing assets. Private gas plants with a capacity of 10,556 MW operated at an average PLF of 13.52 % in the quarter ended June. The draft national energy policy released by the Niti Aayog said a scheme to give feed-in-tariff to the existing stranded gas-based capacity will be launched to address the balancing issues of renewable power.

RGPPL was set up in 2005 to take over and revive the assets of the beleaguered Dabhol power project. NTPC had invested Rs 974.3 crore in RGPPL, where NTPC holds a 25.51% stake. According to a proposed demerger scheme of RGPPL, NTPC would gain control of the 1,967 MW power plant and GAIL would own its LNG terminal. The demerger is awaiting the approval of the National Company Law Tribunal.

 

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