Power minister Jyotiraditya Scindia said on Thursday that he will soon approach the cabinet for putting in place a suitable mechanism under which gas to power projects can be supplied at a viable price.
Scindia said while the government has raised gas prices - that are expected to almost double to $8.4 a unit (per million British thermal unit) from April, 1, 2014, the same cannot be made applicable for the power sector because the cost of power (being a regulated commodity) at this price is not viable.
"Anything beyond $5 a unit is unviable for the power sector and a mechanism to address this issue will have to be worked out by the government ...for which I will be taking this issue shortly to the cabinet," Scindia said while addressing a conference on completing 300 days as the power minister.
The power sector has been struggling to source gas at an affordable price for the 7,800 MW stranded gas-based power plants. At present, the power sector sources domestic gas at $4.2 a unit, but the new price is expected to be almost double from April 1, 2014.
Scindia said while there has already been an agreement that power projects would get any surplus gas produced in India until March 2016, after requirement of the fertiliser plants is met, the cost at which gas is supplied to this sector is of utmost importance.
Scindia also announced that in order to maintain grid discipline and have greater private sector investment in building transmission systems, he would be taking another proposal to the cabinet for having an independent transmission (or grid) regulator.
This, he said, will be done by providing greater autonomy to POSCO, currently an arm of India's largest transmission company - Power Grid.
"We are looking for private sector participation in the transmission sector for which there is a need for a regulator and POSOCO cannot perform as a regulator if it works as a subsidiary of Power Grid," he said.
After POSOCO achieves autonomous status, it will act as a regulator for the transmission grid that is primarily engaged in maintaining grid discipline and discouraging overdrawal of electricity by the states.
Scindia also exuded confidence over getting a better response from companies for the upcoming ultra mega power projects (UMPPs) in Odisha and Tamil Nadu.