Working on options for natural gas pricing for power sector: Scindia

Last Updated: Sat, Jul 06, 2013 18:41 hrs

Union Minister of State for Power Jyotiraditya Scindia says he is working on options for the pricing of natural gas for the power sector following the government's recent decision to increase local gas prices to $8.4 per mBtu. Speaking to Business Standard in Toronto, Scindia said, "We are developing our thoughts on that. There is a subsidy already for fertiliser. That subsidy will continue and I'm preparing a note with regards to what needs to be done on power."

Scindia asserted that power and fertiliser should be looked at as a "separate dispensation" in terms of pricing of natural gas, either in the form of subsidies or differential pricing. "From an investment point of view it makes eminent sense to increase gas prices. But both power and fertiliser are regulated industries, and therefore beyond a certain price it doesn't make sense to use gas as a fuel for power plants, beyond $5 per mBtu," Scindia argued. He said his point "has been very well noted" in the government.

Earlier, speaking at an event hosted by the Canada-India Business Council or C-IBC on Friday, Scindia brought his sales pitch to Canada, inviting investment in India's power sector by pointing to $300 billion worth of investment opportunities across the value chain in the sector. He said India could benefit from Canadian expertise in renewable energy and areas such as the use of robotics in transmission technologies.

Scindia briefed attendees at the C-IBC event about his ministry's target to increase power generation by 118 gigawatts over the next five years, of which around 60 Gw will come from thermal projects. He noted the output of power from renewable sources is estimated to double in that period. 110,000 circuit kilometers of transmission lines are expected to be installed.

The minister told investors that a special cell had been set up in the Prime Minister's Office last week to look at specific infrastructure projects in the private sector that have faced major problems. He assured them any delays on issues like project approvals would be sorted out through new mechanisms such as quarterly meetings between ministers and officials of the Power, Coal, and Environment departments. He also said the government had made it clear that any future subsidies for state electricity boards should be on the balance sheets of the state governments, and not on those of the distribution companies.

He was unapologetic when questioned at the event about India's reliance on coal-fired power plants at a time when countries like the US and Canada are engaged in minimising or eliminating the use of coal due to concerns about emissions. He later told Business Standard, "We need power not today or tomorrow, but yesterday. Execution of low gestation period projects which are economically beneficial is very important and coal does form part of that portfolio." However he pointed out India was also focusing on renewables, and said there had been an exponential decline in the cost of solar power in recent years. Thermal power plants currently account for 68 per cent of India's power generation, with renewables contributing 12 per cent. Scindia said future projects would reduce the share of coal and expand the share of renewables to about 30 per cent.

The minister had also travelled to Montreal on Thursday during his visit to Canada. Before arriving in Canada, Scindia delivered a similar message to investors in the United States, calling for American investment and greater co-operation between the US and India, particularly on hydel power, smart grids and energy efficiency.

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