Power to get cheaper after duty lift on naphtha
The government’s stimulus package of abolishing import duty on naphtha has come as a much-awaited breather for power projects running on dual-fuel.
The lifting of 10% import duty on naphtha is expected to reduce production cost by $1.5 per million British thermal unit (mmBtu). This translates to tariff benefits of about 50-55 paise per unit.
This benefit is going to help state-run NTPC as its six power projects, including Dadri and Faridabad, run on dual-fuel. The total combined capacity of the six projects is 3,955 MW.
NTPC has opted to run some of its dual-fuel plants on naphtha after LNG prices shot up and gas was unavailable. Another reason the company chose to opt for naphtha.
Naphtha, manufactured from crude oil, is used in power sector, fertiliser plants and petrochemical industries as a feed stock.