Fert top priority; nod on gas for power on Mon: Moily

Empowered group of ministers have decided that natural gas requirement of fertiliser sector will be protected and decision on allocating extra gas to power companies will be considered in a meeting on Monday.

In a meeting held today on allocation of natural gas among core sectors like fertiliser, LPG units, power plants and city gas distribution, EGoM decided to maintain the priority status of fertiliser sector.
“Agriculture season is very good…The requirement of the fertiliser – that means urea for the agriculture sector will be fully protected,” petroleum minister Veerappa Moily said. Also read: Govt is not mulling change in new gas price: Moily
He further added that possibilities are being explored if any additional gas can be made available to the power sector. "There are other methodologies which are being worked upon. We are working out a strategy. That strategy will be presented to EGoM on Monday," Moily added.
Due to the current 'priority' status of the fertiliser sector, gas supplies to other sectors like refineries, power and city gas networks has been completely stopped after output from Reliance Industries' KG-D6 fields started falling in 2011. 
To provide relief to other sectors, the oil ministry had proposed two options- equal priority to all core sectors of fertilisers, LPG, power and city gas distribution or according fertiliser and power equal priority. Power sector disappointed
Ashok Khurana, Director General of Association of Power Producers said that power sector was very disappointed with the decision.
"We were expecting same priority for power and fertilisers. We have about 25,000 MW of power, which is lying completely stranded. My idea is about Rs 100,000 crore of money is involved. About 60 percent of these projects are in the South where you have 23 percent of the deficit at the peak time. Industries are going without power 15-18 days. Look at the production loss and the multiplier effect over there. So, therefore if you think holistically one could have given the same priority," Khurana said.
Himanshu Nayyar, research analyst, Quant Capital, however believes that government is right in buying more time for to take such crucial decision. He argued that power sector can use many other sources like coal, solar or hydro for electricity generation, however fertiliser sector does not have any other option but to use natural gas. 
According Nayyar, if the government were to equally distribute natural gas among the power and fertiliser sectors, subsidy bill would have shot up by another Rs 6,000 crore. "If we add on to that the rupee depreciation impact and the fact that gas prices would be increased from next year, it adds up to a total additional subsidy burden of about Rs 20000 crore," he claimed.
Despite having 'priority' status, the fertiliser sector has to meet 25 percent of its gas requirement through imports. The sector is importing about 7-8 million tonne annually, the equal allocation of gas among power and fertiliser sectors would force the sector import additional 5-6 million tonne of urea, Nayyar added.