High LNG prices force Guj to stall generation of 500 Mw power

The rising LNG prices in the international markets are posing a threat to gas-based power plants in Gujarat. Power generation capacity to the tune of six million units (roughly 500 Mw) in the state has to be stalled following steep hike in LNG prices.

According to top government functionary, the power generation from the gas-based power plants in state was badly hit due to higher prices of imported LNG. Unlike other gas-based power plants in the country, those in Gujarat depend entirely on the imported LNG for the fuel requirements. The state is one of the largest gas consumers in India with around one-third share in the country's total gas consumption. Besides, power plants, the city gas distribution (CGD) is also heavily dependent on imported LNG, which costs around $7 per MMBTU against $4.2 under the administered price mechanism (APM). According to industry experts, gas prices for the industry units have risen by almost 10 per cent since January.

The minister of state for energy, Gujarat government, Saurabh Patel said, "Gas-fired power plants in the state are finding it difficult to generate power in the wake of high cost of imported LNG. The high input cost translates into higher power cost for the state. Nearly 500 Mw of power generation is estimated to have been stopped in past four months. How can we afford to provide power at Rs 6 per unit? It is very unfortunate that they (Centre) are giving KG gas to the steel industry and not giving it to Gujarat. We had to shut down around 10 million units of generation, approximately 500 Mw, due to high cost pressure of imported LNG."

Currently, Gujarat has around 13,000 Mw of total installed power generation capacities, while 5,000 Mw of additional capacities are expected to come up in next one year. However, those upcoming capacities will also have gas-based plants. For this, Patel added, "We hope by that time, we will be able to get KG gas for these plants." Gujarat imports LNG from its two LNG terminals each at Dahej, operated by Petronet LNG and Hazira owned by Shell India and Total of France. One more LNG terminal is planned at Mundra in Kutch district by Ahmedabad-based Adani group and state-run Gujarat State Petroleum Corporation (GSPC).