Abolition of import duty on naphtha under the government's stimulus package has come as a much-awaited breather for power projects running on dual-fuel.
"Lifting of 10 per cent import duty on naphtha is likely to reduce production cost by $1.5 per million British thermal unit (mmBtu). This means that tariff benefit of about 50-55 paise per unit can be expected," NTPC R S Sharma chairman and managing director said.
Consumers are also expected to reap benefits, as this may result in tariff reduction of 50-55 paisa per unit.
This benefit is going to help state-run NTPC as its six power projects, including Dadri and Faridabad, run on dual-fuel. The total combined capacity of these six projects is 3,955 MW. Its total installed capacity is around 30,000 MW.
NTPC has been running some of its duel-fuel plants on naphtha as the LNG prices had gone through the roof and gas was not available. That is why, the company was also using naphtha. The other reason to use the fuel is its being economical.
Power Secretary Anil Razdan had earlier said, "I have been informed that NTPC is running its dual-fuel plants mainly on naphtha due to gas shortage and higher prices of LNG."
Adding further he had said, "When global crude oil prices are coming down and naphtha is becoming economically more viable, I also asked them to use this fuel to maintain plant's load factor."
Naphtha which is manufactured from crude oil, is widely used in power sector, fertiliser plants and petrochemical industries as a feed stock.