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Gas-based firms to get Rs 7,500 cr subsidy

Last Updated 26 March 2015, 20:12 IST

With the Centre on Thursday approving financial assistance scheme for revive stranded gas based power firms, a subsidy of up to Rs 7,500 crore will be provided to private electricity companies in the next two years.

Thirty-one power stations with a combined capacity of 14,305 mw, which are languishing due to shortage of gas, can seek support from the Power System Development Fund (PSDF) for generating 30 per cent of their installed capacity, called plant load factor or efficiency, with imported liquefied natural gas (LNG).

Power companies seeking the least support from PSDF, after considering an electricity tariff of Rs 5.5 per unit, will get the first right over LNG, whose delivered price, too, will be slightly reduced by asking the importer and transporter to take a hair-cut in marketing and operational cost, Power Secretary P K Sinha told reporters here.

The Cabinet Committee on Economic Affairs (CCEA) approved a financial assistance scheme for private power companies for two years, with Rs 3,500 crore of support capped for 2015-16 and Rs 4,000 crore for the following year. While private power stations will bid for the financial support, the actual money from PSDF, which collects fines from states for grid indiscipline, will go to the distribution company. To make the imported fuel affordable, the Union government has also decided to waive service tax while the importer will take a 50 per cent cut in the cost of converting the liquid gas (LNG) into its gaseous state, Sinha said.

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(Published 26 March 2015, 20:10 IST)

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