India's federal government will not support gas-based power plants that are stranded or operating at sub-optimal levels because of a lack of gas supply, given that the states themselves are unwilling to grant concessions to such projects, power minister Raj Kumar Singh said in the upper house of the parliament on March 9. 

Utilisation of gas-based power generation has grown without any support anyway, the minister noted. Gas prices have been on a downward trend since last year, making gas-fired power more competitive. As a result, the load factor at gas power stations rose from 22.15% between April 1, 2019 and March 31, 2020, to 26.64% as of August 2020.

As such, "it was decided that there may not be any need to have any policy on providing support to the gas-based power plants at this juncture,” the minister said. 

The federal government has been discussing support measures for gas-fired power with the states for some time. State governments believe concessions for struggling plants, such as reduced tax on gas supply, are not feasible in the current economic situation, Singh said. 

There was previously a federal support scheme for stranded gas power plants, aimed at ensuring they could obtain imported LNG and domestic gas at the expense of all stakeholders and supplemented with support from the power system development fund. But that scheme expired in March 2017. The Central Electricity Authority estimates that about 5.5 GW of India's 25 GW of gas-fired generation capacity was offline between April 2020 and January 2021, due to a lack of gas supply.