India's power ministry includes WIM LNG benchmark for electricity pricing of emergency requirements

India's Ministry of Power has issued an energy charge rate for gas-based power generation companies based on the Platts West India Marker (WIM) to consider the cost of gas in power generation in meeting emergency power requirements, sources familiar with the matter told S&P Global Commodity Insights May 13.

According to market sources, the consideration by the government for price of power in the generation during first half of May was based on the value published for West India Marker for May H1.

WIM is the benchmark price for LNG cargoes delivered into ports in India, and the Middle East region. The inclusion by the Ministry of Power marked the continued adoption of WIM in domestic gas supply, as well as LNG contracts in India.

WIM was also included by NTPC Vidyut Vyapar Nigam Limited, the power trading arm of state-owned power generation company National Thermal Power Corporation Limited in its power procurement tender for procuring power from gas-based power generators in January.

Platts assessed the WIM at $9.475/MMBtu on April 30 for May H1 and assessed at $9.8/MMBtu on April 15 for May H1, according to S&P Global Commodity Insights data.

This inclusion of LNG benchmark in power sector comes at a time when India is anticipating record high power requirements in the summer season. In order to meet the power requirements, government has requisitioned power from gas-based power generators, as reported earlier.

In the earlier communication, the ministry of power had said that Grid India will inform the gas-based stations that they are required to generate power in a given week 14 days in advance.

The gas-based stations notified and scheduled by Grid India on D-1 basis shall be guaranteed for dispatch at a minimum of 50% capacity round the clock during the designated high-demand period, it said.

A source familiar with power generation in India said that in the week ending May 10, power generation under section 11 was initiated in smaller volumes and further generation was also scheduled by Grid India on May 14.

The communication on April 12 by the power ministry had said that the benchmark rate would be reviewed every fortnight to reflect change in gas prices and transportation costs.

The usage of WIM is to calculate the energy charge rate for power plants that do not have a power purchase agreement in place, sources said.

Market sources said that in the week ending May 10, gas-based power companies were consuming 15-16 million standard cu m per day to meet peak load requirements.

On May 13, Platts assessed WIM at $10.088/MMBtu for June.