The power ministry has asked for a Rs 9,000 crore additional subsidy to pay for imported natural gas.
In a note for the Cabinet Committee on Economic Affairs (CCEA) the power ministry has contended that this subsidy is necessary to ensure electricity produced with gas as fuel does not become costlier than Rs 5.50 per unit.
The ministry has suggested an equivalent mechanism to that planned for the coal sector. It wants to pool cheaper domestic gas with the costly re-gassified liquefied natural gas (RLNG) for a uniform rate for all gas-based power stations.
With the pooling while the cost of generation will be about Rs 10,the consumers can be shielded at a price of Rs 5.50 per unit. The difference will be subsidised by the government through the payout. The ministry has asked the CCEA to allow this price pooling of domestic gas and imported RLNG to begin this fiscal.
The arithmetic worked out by the ministry shows the subsidy will be Rs 2,498 crore assuming the plan is cleared before November,while it will rise to Rs 8,646 crore in next fiscal and Rs 10,849 crore in 2015-16. Justifying its proposal on price pooling,the ministry has cited that at least 12 power plants dependent from the Reliance Industries KG D-6 basin have been operating at substantially low capacity.