Delay in allocation of gas hits power sector

Around Rs 40,000 crore (Rs 400 billion) investment in the power sector is in limbo for want of government decision on allocation of natural gas to the proposed electricity stations.

According to sources, besides the existing power plants, there are about 8,000 MW gas-based power plants under construction and the gas linkage to such projects have not been granted due to shortage of gas.

Of the 8,000 MW under construction projects, about 1,335 MW have been completed and others are in advanced stages of construction, sources said. After commissioning of these under construction projects, total gas-based project capacity will go up to 24,000 MW.

They further added the projected investment of around Rs 40,000 crore is at the risk of becoming Non-Performing Assets (NPAs).

Power Ministry may soon approach Cabinet Committee on Investment (CCI) to seek diversion of as much as 6 million standard cubic meters per day of gas currently consumed by non-core sectors like steel and petrochemicals, to power plants.

As much as 15,000 MW gas-based capacity in the country has taken a hit after RIL snapped supplies from its KG-Basin in March this year.

"The decline of gas based generation besides affecting bank exposure will also affect economic development, especially of the power-starved Southern region," sources said.

The are 55 gas-based stations -- 14 (Andhra Pradesh), 12 (Gujarat), 6 ( Tamil Nadu), 5 ( Assam), 4 each in Delhi and Tripura, 3 each in Rajasthan and Maharashtra, 2 (Uttar Pradesh) and one each in Haryana and Puducherry.