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The plant load factor (PLF) of gas-based power plants is likely to decline further in FY18 due to continued shortage of gas stretching their finances, according to India Ratings and Research (Ind-Ra).
In its report, it highlighted that this expectation is based on the closure of the scheme for the revival of GBPPs (gas based power plants) by way of Government subsidy through power system development fund, higher variable cost of generation than that for coal-based power plants and other alternatives such as availability of lower-cost power on the power exchanges and no improvement in domestic gas production.
The Government had announced a subsidy scheme in FY16 to revive GBPPs, leading to PLFs of these plants marginally improving to 23 per cent in FY17 from a low of 21 per cent in FY15. The subsidy scheme added only 2-3 per cent to PLF. Implementation of the scheme led to additional generation of about 15 billion kWh in FY16 and FY17, which is below 1 per cent of the total electricity generation.
The private sector plants were the worst hit due to lack of long-term power purchase agreements.
The variable cost of power generated from imported regasified liquefied natural gas (RLNG) at Rs 2.84/kWh is higher than the variable cost of generation from other fuels such as domestic coal (Rs1.92/kWh) and imported coal (Rs 2.68/kWh). This rules out spot RLNG use by these plants.
The domestic gas supply has not improved since FY14. Production has declined to 87.4 mmscmd in FY17 from 97 mmscmd in FY14 and from the peak level production of 143 mmscmd in FY11. Thus, it is difficult to revive GBPPs as regasified liquefied natural gas (RLNG) would always remain a costlier option than domestic gas.
Even if the subsidy scheme for GBPPs is made available again, distribution companies’ appetite to buy power at Rs 4.7/unit would remain low due to access to cheaper alternatives.
The credit profile of private sector owned GBPPs has deteriorated and several such projects have already applied for debt restructuring. In the absence of a long-term solution entailing gas availability at cheaper rates, the credit profile of these projects would continue to reflect the underlying fuel price, fuel availability and off-take risks, the agency report further observed.
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