- Gas pricing will obviously have a significant impact on the tariff from power generated using the fuel. The Planning Commission has, thus, called for pooling of gas prices to ensure the viability of all the upcoming power plants in the country.
- A pooling mechanism is necessitated by the fact that while the price for domestic gas is regulated at USD 4.2/MMBTU, international prices are volatile and usually higher, a disadvantage for those plants procuring fuel supplies from importers.
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The other alternative, and an economically more sound measure, is to free domestic gas prices to attain parity with international prices, which is, however, politically untenable.
- According to the commission, based on forecasts of international prices, pooling would imply an average delivered price of USD 6-7/MMBTU, which translates into a long term tariff of Rs 3-3.5/kwh.
- Usually, a tariff of Rs 2.5-3/kwh is considered acceptable.
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