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MOSL: UTILITIES-Lower LNG prices may power up gas-based plants

Utilities: Lower LNG prices may power up gas-based plants

 

We met a senior representative of the Gujarat Electricity Regulatory Commission (GERC). Key takeaways:

• According to the regulator, the recent fall in LNG prices can be an opportunity for the revival of some of the gas-based plants in India. There is likelihood that the LNG market will remain over-supplied. At spot LNG prices, gas plants have become competitive. In our view, Torrent Power (TPW) with 1.8GW of untied gas plants could be a beneficiary.
• Gujarat's 3GW long-term PPA for coal-based plants accentuates the importance of coal-based power generation in India. GERC believes that coal-based plants are inevitable to meet the base load requirement, as renewable energy sources are intermittent and cannot be completely relied upon. In our view, JSP is best placed to garner a good chunk in the 3GW PPA, given its strong competitive positioning.
• The regulator believes that the operational turnaround of DISCOMs will be a gradual process. Schemes like Suryashakti Kisan Yojana (solar pumps for agriculture) can significantly improve the financial health and operational flexibility of DISCOMs, as this will significantly reduce their obligation toward the agriculture sector.