Ministry proposes Rs. 6,000-crore subsidy for gas-based power plants.

The Power Ministry has moved a note before the Cabinet Committee on Economic Affairs (CCEA) with a proposal for a Rs. 6,000-crore subsidy for distribution companies and a financial restructuring package to improve the viability and utilisation of stranded gas-based power projects across the country.

The subsidy component would compensate the State discoms to act as a buffer to allow them to buy power at a higher rate and sell it at lower rates to consumers. According to the Cabinet note, the Centre would give subsidy to the electricity distribution companies for buying expensive power and selling it at a discount. This support would be for the administered pricing mechanism gas-based plants which would be hit by the increase in the price of gas from April 2014. The present gas-based power generation capacity in the country is around 18,964 MW, while another 8000 MW is waiting for gas allocation.

The Hindu