4 min readNew DelhiJun 7, 2026 06:25 AM IST
First published on: Jun 7, 2026 at 06:25 AM IST
With Iran war hitting the imports under long-term contracts, gas-based power generators in India have sharply jacked up natural gas purchases from the spot-market this summer to fill the void.
Between April 1 and May 26, power-sector entities purchased 44,67,850 million Metric Million British Thermal Units (MMBtu) of natural gas from the spot market.
This was 336.5% higher than the corresponding period in 2025, more than double the volume purchased in 2024, and nearly 140 times the level recorded in 2023.
Data released by the Central Electricity Authority (CEA) shows that none of the country’s 16 gigawatts (GW) of gas-grid connected capacity received imported LNG under long-term arrangements in April. Domestic gas availability also remained constrained.
Although 30.18 million standard cubic metres per day (MMSCMD) of domestic gas was allotted to this 16 GW of gas-grid connected capacity, actual supply in April stood at just 4.33 MMSCMD.
Most of this was supplied to state government owned generating stations, while private-sector plants received only 1.07 MMSCMD, all of it supplied to a single gas-based power station. Conflict in West Asia has cast a shadow over availability of gas for the country’s gas-based power plants with the government deciding to prioritise certain sectors during the shortage.
While gas accounts for only a small share in India’s overall generation mix, it plays a crucial rebalancing role during evening peak hours, especially during summer, when solar output drops. Typically, around 10 GW of gas-fired capacity is relied upon during peak summer — making any disruption a significant gap that needs to be filled.
Heavy reliance on spot purchase
Despite a sharp rise in imported LNG prices, spot-market purchases by gas-based generators reached the highest levels in recent years during April and May, data provided by Indian Gas Exchange (IGX) — the country’s leading gas-trading bourse — shows.
The surge was evident in both April and May.
In April, power sector companies purchased 15,67,950 MMBtu of natural gas, a year-on-year increase of 260.5% from 435000 MMBtu in April 2025. The sharp increase came against the backdrop of a significant shift in fuel sourcing. In April 2025, gas-based power plants met nearly 38% of their LNG requirement through imports under long-term contracts, alongside spot-market purchases.
The absence of imported LNG under long term contracts was also reflected in lower utilisation levels.
The Plant Load Factor (PLF) — a measure of actual generation as a percentage of installed capacity — of the country’s 16 GW of gas-grid connected capacity stood at 11% in April, down from 15.3% in the same month last year.
The purchase from the spot market further increased to 28,99,900 MMBtu from May 1 to May 26, compared with 5,88,550 MMBtu during the corresponding period last year, marking a nearly five-fold increase of 392.7%.
The rise in purchases came despite a sharp increase in spot-market gas prices amid supply disruptions due to the conflict in West Asia. The average spot gas price stood at Rs 1,606 per MMBtu in April, up 43.5% from Rs 1,119 per MMBtu a year earlier. Prices rose further to Rs 1,856 per MMBtu in May, a jump of 77.4% over Rs 1,046 per MMBtu in May last year.
Struggling gas plants
Power generated from gas-based units is typically more expensive than coal and renewable energy. However, due to their flexibility, they are generally used during high-demand periods to meet evening peak demand.
In the past, the government has invoked emergency measures to ensure utilities operate both gas and coal plants at full capacity when soaring temperatures push electricity consumption to record levels.
However, the utilisation of India’s gas-based power plants has been steadily declining, largely due to high fuel costs.
The purchase from the spot market further increased to 28,99,900 MMBtu from May 1 to May 26, compared with 5,88,550 MMBtu during the corresponding period last year, marking a nearly five-fold increase of 392.7%.
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