Government likely to withdraw subsidy-based gas auction for power plants

NEW DELHI: The government is likely to withdraw subsidy-based gas auction to power plants and may instead charge the companies for the fuel.

The power ministry has cancelled the third round of gas auction to power plants and is likely to call price bids for the gas, sources said.

The ministry received aggressive bids from companies in the latest round of gas auction, where GMR Energy, GVK Power, Lanco Infratech and Sravanthi Energy demanded zero subsidy for the gas.

"Low global gas prices and aggressive bidding by the companies has prompted the government to consider withdrawing subsidy," a senior official said, adding the next round of auction can be held on Sunday.

At present, the companies that need the fuel compete in a reverse auction by bidding the lowest amount of subsidy they need to supply the generated electricity from gas stations to distribution companies at Rs 5.50 per unit.