Revival plan on cards for gas-based power plants.

After the big-ticket oil sector reforms, the government is turning to the power sector to help banks. Developers of about 16,000-mw stranded gas-based power plants will be able to service their debt, if a joint proposal of the power and oil ministries is approved by the Union Cabinet.

The government proposes to increase the fixed cost of the gas-based plants at Rs 1.10 per unit of electricity while keeping the tariff at Rs 5.50 per unit, which will allow the operating companies to meet their financial obligations. This will prevent the idling projects, put up at an investment of Rs. 64,000 crore, from turning non-performing assets.

The proposal will benefit power plants of Lanco Infratech, Essar Power, Reliance Power, GVK Group and GMR Energy, among others. The fixed cost cap has been raised from Rs 0.85 per unit planned earlier by the two ministries. The proposal has been made after major power companies conveyed their willingness to the government to forego part of their fixed costs.

ET