Give power stations priority for gas allocation: Ministry

The Power Ministry has demanded that electricity generating stations be given priority at par with fertilizer plants in allocation of natural gas, saying power unlike urea cannot be imported.

Currently, gas-based fertilizer plants get top most priority in allocation of scarce natural gas. They are followed by LPG-extraction units and gas-based power plants are placed third in the priority list.

This meant that when Reliance Industries' KG-D6 fields faced an unanticipate fall in production, all available gas was first used to meet full requirement of fertilizer plants.

Thereafter, full requirement of LPG plants was met.

Any gas left after that was distributed among the power plants on a pro-rata basis, resulting in sharp dip in electricity generation.

"There is a need of re-prioritisation of gas. Fertiliser can be imported but power cannot be imported. An equal status for power plants can be considered as we give to fertilizer," Power Minister M Veerappa Moily told PTI in an interview.

With KG-D6 output dipping to 27.5 million standard cubic meters per day instead of rising to projected 80 mmscmd, a pro-rata cut in supplies has been effected on 25 power plants which had an originally been allocated 28.90 mmscmd of gas.

But there was no cut in the 15.668 mmscmd allocation to 16 fertiliser plants, who were given top priority in gas allocation.

LPG manufacturing plants got 2.6 mmscmd of gas while the remaining 9.3 mmscmd was prorated among 25 power plants.

Moily said shortage of gas has led to drop in power generation. "There is an urgent need to readjust the priority for gas allocation."

To overcome the situation, some private power producers have demanded that price of domestic natural gas be pooled or averaged out with high cost imported LNG so that a levelised and affordable price of gas is available.

Moily, however, did not say if his ministry supported the proposal particularly when it would mean that the power firms which are currently getting the domestic gas would have to pay higher price.

Domestic gas is predominately priced at USD 4.2 per million British thermal unit while imported liquefied natural gas (LNG) is priced at four times this rate.

"Pooling of prices for coal and gas is an issue before the government, there is a demand from all the power producers, we are seriously considering it," he added.