The Government of India (GoI), with the objective to arrest the prospect of various gas-based power projects becoming ''non-performing assets'' (NPA) for the banking system, has devised a plan to improve fuel supplies and hence operational performance of these projects. Under this scheme, the GoI is targeting ~16GW of power plants, which are currently non-operational, and which under this plan will operate at ~30% PLF.
This will be achieved with the GoI providing subsidy beyond Rs 5.5/kWh, which will be the level at which the tariff for the power produced will be capped. All entities in the gas value chain are expected to take a haircut under this scheme.
Commenting on the same, Edelweiss Research, said, ''While finer details like logistics, tenure and other modalities are awaited, we believe stranded gas-based power developers will be able to meet their interest costs in the interim. However, a more sustainable solution would be higher supply of domestic gas.
The move will enable power developers to partially service their debt, while power supply to the extent of ~5GW could incrementally flow into the system (largely in AP and Maharashtra). Since the pressure on further restructuring of loans will ebb, power producers like Lanco Infra (Buy) and GMR Infra (Buy) could benefit from the move.''
