Ministry to the rescue of gas-hit power plants.

In what can offer a new lease of life to gas-stranded power plants, the Power Ministry has proposed that electricity distribution utilities should get subsidy from the Government to buy power generated from these units.

In a Cabinet note circulated on February 5, the Ministry has proposed subsidy for distribution utilities based on the difference in actual tariff and Rs. 5/unit for 2014-15 and Rs. 5.50 for 2015-16. The indicative subsidy to be borne by Government would be about Rs. 3,621 crore in 2014-15 and Rs. 2,056 crore in 2015-16.

Gas-based power plants directly compete with coal fired plants and distribution utilities reeling under severe financial constraints are reluctant to buy expensive electricity. The Ministry has also proposed a three-year moratorium on loan repayments. This will benefit companies such as NTPC, Lanco, GMR, GVK, Torrent, Reliance Power and Essar Power.

HBL