Indian Gas-Based Plants Face Liquidation: Press
India’s gas-based power plants have started going into liquidation and are expected to fetch no more than 10% of their value, Economic Times said in a report published on December 23. The country has 25 GW of gas-based capacity that is either stranded or operating at an economically unviable low output.
The 445-MW Konaseema Gas Power is the first gas-based plant to go into liquidation while other similar projects remain stressed due to the non-availability of natural gas. The project, set up with around rupees 40bn ($540mn) investment, was admitted in the National Company Law Tribunal (NCLT) in December 2018. Only one financial bid of rupees 1.54bn was received by the committee of creditors, Economic Times reported. The bid has not been accepted and the plant is under liquidation as a going concern.
Similarly, other such projects like Lanco Kondapalli which are in NCLT are unlikely to draw bidders, industry executives told the newspaper. Of the 25 GW installed capacity of gas-based plants in India, around half are under stress. Of these, around 5.60 GW have had absolutely no gas supplied to them during the 12 months to March 31 2020 (FY2020) and 6.16 GW of plants have had limited gas supplies.
Owing to the limited supply of gas, these plants are operating at an extremely low plant load factor of 22%. Nearly 80% of the capital cost of these stranded gas-based plants has been financed by banks, Economic Times said.
The government in October shelved a proposed revival scheme for the gas-based projects owing to low global gas prices and the unwillingness of states to forego taxes, and instead allowed the stressed plants to put in pooled bids with renewable energy projects, the newspaper said. Power companies, however, said it was not possible for gas plants to compete with other conventional projects in the bidding scheme.