The Central Electricity Authority and NTPC appear to be taking different stands on having a common price for gas from different sources, called pool pricing.
CEA is open to considering separate price pools for power and fertilizer sectors with certain conditions, NTPC has outrightly rejected the idea.
Commenting on a report by Spain’s Mercados Energy prepared for gas utility GAIL, CEA said the pooling option excluding spot LNG (gas imported in ships) suits the power sector. Supporting separate pools for power plants, it said ‘‘ electricity generated by burning gas is distributed in a competitive environment and tariff is decided by regulators ... The nodal agency and the pool can be achieved with a few necessary operational regulations... and may be considered.’’
But NTPC has told the power ministry it is opposed to any kind of pooling as the resultant price will be higher than the present average cost of fuel sourced variously by power producers. With a common price, both power producers and gas importers will lose incentive to source LNG at competitive rates.
NTPC said the pool term of 4-5 years will create uncertainty as power plants are planned on long term of 25 years or more and fuel supplies are also tied up as such on term contracts. Price pooling will put old plants at a disadvantage because of their lower efficiency. Power producers will also have no incentive to schedule their production plan efficiently and higher pool price could also affect viability of many projects that were financially planned with lower fuel costs.
Source: Economic Times
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