Prospects for gas-based power plants not adverse: CRISIL

Prospects for upcoming gas-based power plants in the country are not as adverse as is generally believed, says a recent report by CRISIL Infrastructure Advisory.

The report notes that domestic gas production cannot meet the requirements of 8,000-10,000 MW of gas-fired power generation capacity expected to come on stream over the next few months. However, this capacity, that has an investment value of Rs35,000 - Rs40,000 crore, can avoid financial distress by tying up LNG (liquefied natural gas) supplies to make up for the shortfall of domestic gas.

Gas discoveries in India over the last few years prompted an aggressive addition to the gas-based power generation capacity in the country. However, gas production from these discoveries has lagged expectations.

This has created a challenge for these new plants that will add a substantial 70 per cent to the existing gas-based capacity of 16,000 MW. They will now have to explore a mix of domestic gas and LNG to stay afloat.

According to Gurpreet Singh Chugh, head, natural resources, at CRISIL Risk and Infrastructure Solutions Limited, ''Power purchase costs of power utilities in India have risen over the last few years. This makes LNG a viable blending option for them in the present situation''.

The CRISIL Infrastructure Advisory report has analysed the trends in power purchase costs in India over the last few years.