Its All About Power Sector

Indian Power Generation is majorly based on the conventional fuel sources i.e, coal and gas, a fact that cannot be denied. Out of the total installed capacity of 229251.73 MW as on October 2013, thermal capacity accounts for 156468.99 MW which is close to 68%. Of the total thermal installed capacity Gas based capacity contributes 20380.85 MW which is close to 13% of thermal capacity and 8% of total installed capacity and supplements coal based power generation for the growth of Indian economy. Keeping these facts aside, the plant load factors have never seen a consistency owing to shortages in fuel supply for both coal and gas.
Coal based plants in the recent times have seen a measurable improvement in the coal stock position. But the gas supply scenario for the gas based based power plants still remains a serious concern keeping most of the plants under strandedness or with meagre PLF's. The scenario in the country for these plants most likely seem to end up with complete shutdown or operate only during peak hours if the existing supply scenario continues to persist. Additional capacity that is already planned seems to give a bleak support to the capacity addition.
Moving on to the facts of gas supply and requiremtns for these plants, with a total Gas based capacity of 18,714 MW as in June 2013, 16,374 MW are on the gas grid which require gas of 62.07 MMSCMD to operate at 75 / 70 percent PLF. Gas based capacity of about 2,340 MW, which are off the gas Grid, are operating at 56.4 percent PLF with the gas being supplied from the isolated/ local gas fields. Further, additional 7815 MW of new Gas based capacity could be commissioned in near future if gas is available.
Gas based generation in India got the impetus when HVJ (Hajira-Vijaypur-Jagdishpur) gas pipeline was commissioned by GAIL in the 80's after discovery of gas in the west coast of India. This led to number of Gas based CCGTs commissioned along the HVJ pipeline in the Western and Northern part of India. Apart from the major HVJ trunk pipeline, certain isolated gas fields like in North-East, Kaveri basin, Ravva basin etc. also helped in development of some gas based capacities in those areas but these are not connected to the main gas grid.
After the KG-D6 discovery of RIL and commissioning of East West pipeline by RGTIL, KG D6 gas got infused into the system in early 2009. MoP&NG has granted gas linkage to the existing Gas based plants. Against this requirement, the actual gas supply to these power plants in June, 2013 was about 20.70 MMSCMD (Domestic gas 17.26 MMSCMD, 1.98 MMSCMD Long term RLNG & 1.46 MMSCMD Spot RLNG), which is just sufficient to operate these power plants at 23.7 percent PLF. The power plants with high dependence on KG D6 gas are stranded and have potential of becoming Non-Performing Assets (NPAs) due to shortage of gas. These plants have been severely affected because of their total dependence on KG D6 gas.
As the production of KG D6 gas has nose-dived from the peak of around 63 MMSCMD in late 2011 to below 14 MMSCMD in June 2013, the supply to power sector has become zero since March, 2013. The shortage of domestic gas has resulted in significant gas based capacity getting stranded or operating at sub-optimal level of average PLF of 27.8 percent (total gas based capacity) and 23.7 percent PLF (Gas based capacity on the gas grid) as of June, 2013. Despite having power shortages in the country, these gas projects have remained grossly unutilized / stranded causing immense loss to the economy.
Besides the existing power plants, based on the projections of MoP&NG / DGH regarding the future KG D6 gas availability of 80 MMSCMD, many developers (both public and private) set up new plants on the gas grid out of which 1,335 MW has already been commissioned and a capacity of 7,815 MW is almost ready for commissioning. The dwindling gas supply from KG D6 has been a cause of alarm for Power sector and has upset the gas based capacity addition programme. The allocation of KG D6 gas for new gas based power projects was expected when the plants are ready to commence production. However, these  projects have not been allocated any gas, which puts the projected investment of around INR 40,000 Crore at risk. After commissioning of these projects, the total gas based project capacity will go up to 24,189 MW. MoP has already dimensioned not to plan any gased based capacity addition until 2015-16.
Shortage and Availability in the future: Against the requirement of 92.34 MMSCMD (@ 70/ 75 pwercent PLF) for the pipeline connected existing and new Gas based power plants, the actual supply in June, 2013 was only 20.70 MMSCMD (17.26 MMSCMD Domestic gas and 3.44 MMSCMD RLNG) leaving a huge shortage of 71.64 MMSCMD. Recently MoP&NG has given projections for the additional production of domestic gas from various sources stands out to be 56.34 mmscmd at the end of 2017-18 and the availability of RLNG as 174.6 mmscmd. So it is anticipated as per the projections that the gas capacities are available to meet the additional demand of Power Sector consumers.
These facts speak a lot about the current scenario of gas based plants in the country and demands for a complete overhaul in the existing allocation mechanism of gas to Power Plants and the clearances in setting up a power plant which pose a huge loss to the private and public developers financially. This poses a threat of reduction in participation of the private developers in power sector and may rule out the competitive factor on which the Electricity Act 2003 has laid a major emphasis on. A mechanism to improve gas supplies and control the prices of higher import costs of RLNG for power sector is the need of the hour to keep these plants in motion and improve the operational performance of the sector as a whole.

Source: Cerebral Business Research Pvt. Ltd.