nThe Power Minister, Mr Sushilkumar Shinde, said on Thursday that power tariffs could go up by as much as Re 1 per a (kwh) for projects following the Government's decision to hike gas prices under the administered price mechanism (APM) late on Wednesday evening.
However, industry players are of the view that the overall impact of the hike on electricity tariffs will be much less as power generated using gas makes up about 11 per cent of the overall generation in the country. Of this, less than half the fuel requirement is met by APM gas currently.
"The power tariff would go up. We have not worked out the details, but it is likely to be about Re 1 per unit," Mr Shinde told newspersons on the sidelines of a FICCI event. The Union Cabinet had raised the price of gas produced from fields given to state-run ONGC and Oil India without bidding (APM gas) from $1.79 per unit to $4.20 to help the oil companies recover the cost of operation.
The contribution of gas as feedstock to the country's total installed generating capacity of 1,59,398 MW was 10.7 per cent (17,056 MW) as on March 31, 2010. In 2009- 10, gas-based plants accounted for 12.5 per cent in the actual electricity generation of the country.
At present, of the total availability of natural gas of 140 mscmd (million standard cubic metres per day), APM gas constitutes 55 mscmd. Of this, 24.5 mscmd is being supplied to the power sector.
"The power sector consumes 40 per cent of natural gas, of which 47 per cent is APM gas. So the impact is not going to be that high, especially with the share of APM gas set to progressively come down over the next few years," an executive with a utility operating gas-based stations said.
APM gas essentially refers to gas produced by entities awarded gas fields prior to the PSC (Production Sharing Contract) regime. The price of gas from these fields is administered by the Centre and the APM gas is allocated under Ministry of Petroleum and Natural Gas' directive issued on June 20, 2005.
The power and fertiliser sectors, small consumers having allocation up to 0.05 mscmd and consumers drawing gas under Supreme Court orders are given priority for supply of APM gas.However, the quantity of the APM gas is projected to sharply decline, with the shortfall to be met through separate commercial arrangements by utilities.
Source :
The Hindu Business Line : Gas price hike could raise power tariffs by up to Re 1/unit
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