Government recently started the auction for subsidy to import natural gas for restarting the stranded power plants, with 14 bidders including GMR, GVK and Lanco in the fray.

Stranded plants with 8,100 MW capacities have been registered for this round of bidding for which the government subsidy outgo will be Rs. 792 crore.

Power producers bidding for the lowest subsidy will get the first right over the fuel.

According to a senior Power Ministry official, this round of bidding is for 8.9 MMSCMD (million standard cubic metres per day) gas required to start the stranded gas-based plants during the June-September period this year.

Overall, 31 power stations with a combined capacity of 14,305 MW are languishing because of want of gas. They can bid for support from the Power System Development Fund (PSDF) for generating 30 per cent of their installed capacity, called plant load factor, using imported Liquefied Natural Gas.

Power companies seeking lowest support from PSDF, after considering an electricity tariff of Rs 5.50 per unit, will get the first right over LNG. Its delivered price too will be reduced by asking importer and transporter to take a hair cut in marketing and operational cost.

Gas-based plants which were idling for want of gas between April 2014 and January 2015 are eligible to bid for government support during the auction.

Auctions (Financial Bids) will be conducted separately for Stranded Gas-Based Plant (SGP) and plants receiving Domestic Gas (DGP). SGP and DGP auctions will be conducted on two consecutive days.

The second round of auction for DGP will begin after the completion of bidding for SGP, the official said.

The auction will be conducted in 2 steps. It will remain open for 45 minutes during which the bidders would be required to submit the Total Incremental Electricity (above the base PLF of 30 percent) for the specific round.

After the 45 minute period is over the bidders will no longer be able to change this figure of Total Incremental Electricity for the specific round.