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Thursday, May 20, 2010

The selling price of power generated by gas-based plants will increase to Rs 1.20 per unit on account of the hike in the price of natural gas, the gov

The selling price of power generated by gas-based plants will increase to Rs 1.20 per unit on account of the hike in the price of natural gas, the government said today.

However, how much of it would translate into consumer tariff would depend on state regulatory authorities.

"The increase in administered gas price will certainly increase the electricity rates because the cascading effect is bound to come on such things," Shinde said on the sidelines of a Ficci event here.

He said the cost of generation would go up by 90 paise, to Rs 1.20 per unit (Kwh), for gas-based power plants in the country, and added that consumer prices are also sure to go up, but the exact quantum would be worked out.

Gas-based power plants account for only about 10 per cent of the total energy-generation capacity.

"This is true that all our units are not run on gas. All those running on gas would be affected by the increase," he said.

Power producers are paid on the basis of fixed cost and variable cost and the increase in the price of natural gas would accordingly have to be taken into account by the Central or state regulatory authorities.

Yesterday, the Union Cabinet decided to more than double the natural gas prices to $4.20 per unit (mmBtu).

The cost of gas sold to power firms would increase from Rs 3,200 per thousand cubic metres to Rs 6,818 per thousand cubic metres.

After adding royalty, the new price for user industries would be Rs 7,500 per thousand cubic metres.

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