Country’s largest power generator NTPC with a 4,000 Mw gas based capacity has opposed the proposal to pull the price of gas sold under administrative price mechanism (APM) with the prices of imported LNG in the spot market. NTPC’s letter to the power ministry said, this move will make gas dearer by at least 20 per cent and it will put existing gas based power plants in disadvantageous position compared to new one which are currently being built as they have higher efficiencies due to the new technologies.

APM gas, produced by state-run ONGC and Oil India from fields allotted to them under a nomination basis, constitutes about 30 per cent of 133 million standard cubic meters per day produced in the country. NTPC said since the pooled prices were proposed to be uniform for all customers, the existing gas-based stations would be at a disadvantage in respect of price competitiveness for scheduling of power as compared to newer stations because of a higher designed heat rate of new gas-based stations.

There will be no incentive for the LNG importers or power producers to bring LNG at a competitive price as every purchase will become part of the pool, said senior official from a power utility. According to NTPC, the cost of generation of existing gas based power stations would increase substantially as the pooled gas prices would be higher than the average gas prices under the existing contracts for these stations. Moreover, with the every new LNG contract getting pooled in future, the pooled price would further increase.

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