Few takers for unviable gas based power plants

NEW DELHI: Gas-based power plants have started going into liquidation and are expected to fetch no more than 10% of their value. The country has 25 GW gas-based plants set up at an estimated Rs 1 lakh crore investment, which are either stranded or operating at economically unviable capacities.

The 445 MW Konaseema Gas Power Ltd is the first gas-based plant to go into liquidation on going-concern basis while other similar projects remain stressed due to non-availability of fuel. The project, set up with around Rs 4,000 crore investment, was admitted in NCLT in December 2018. Only one financial bid of Rs 154 crore, including land value of Rs 80 crore, was received by the committee of creditors. The bid has not been accepted and the plant is under liquidation as a going concern.

Similarly, other such projects like Lanco Kondapalli which are in NCLT are unlikely to draw bidders in this environment, industry executives said.

Of the current 25 GW installed capacity of gas-based plants in India, around 12 GW are under stress. Of these, around 5.60 GW have had absolutely no gas supplied to them in FY20 and 6.16 GW of plants have had limited gas supplies in FY20.

Due to the limited supply of gas, these plants are operating at extremely low PLF of 22%. Nearly 80% of the capital cost of these stranded gas-based plants has been financed by banks.

The government in October shelved a proposed revival scheme for the gas-based projects due to low global gas prices and the unwillingness of states to forego taxes, and instead allowed the stressed plants to put in pooled bids with renewable energy projects. Power companies, however, said it was not possible for gas plants to compete with other conventional projects in the bidding scheme.