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The cabinet will consider a proposal to subsidise gas-based power plants to prevent electricity from becoming too costly. The power ministry has circulated a draft note for the cabinet committee on economic affairs (CCEA) for improving the viability of gas-based power generation, which seeks approval to allocate financial subsidy by the government to address the issue of substantial increase in the price of domestic natural gas.
The note points out that the average cost of gas-fired electricity will go up to Rs 6-7 per unit from Rs 3.50-5, making electricity unaffordable for state electricity boards. The note says that several state electricity boards, including Andhra Pradesh and Tamil Nadu, have allowed power distributor companies (discoms) to buy electricity at a ceiling of Rs 5 a per unit. Therefore, it is necessary to subsidise gas-based power plants.