Power ministry wants priority in gas supply for plants

Power Ministry has sought priority status from the Oil Ministry for electricity generation plants and the fertiliser units at the time of allocation of gas from RIL's KG basin.
    
Power Minister M Veerappa Moily has written to the Petroleum Minister S Jaipal Reddy urging priority to gas-based power projects while allocating fuel from the KG basin.
    
"We have communicated (this) to the Oil Ministry," a Power Ministry official told PTI.

Also read: OilMin cancels RGTIL's permits for laying 4 gas pipelines
    
Currently, gas-based fertilizer plants get top most priority in allocation of scarce natural gas. They are followed by LPG-extraction units with gas-based power plants placed third in the priority list.

Moily had earlier said there is a need for 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 fertiliser," he said.

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 originally been allocated 28.90 mmscmd of gas.

But there was no cut in the 15.668 mmscmd allocation to 16 fertiliser plants, which 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.

Shortage of gas has led to drop in power generation, which in turn, will make the mammoth task of adding over 88,000 MW in the next five years difficult.
    
The country's largest gas-based project at Dabhol in Ratnagiri (Maharashtra) is running at one-third capacity due to lack of fuel.
    
The 1,967 MW station is producing only 630 MW electricity due to insufficient fuel supplies.
    
The plant needs a total of 9.2 million cubic metres of gas per day. It was allocated 7.6 mmcmd from KG-D6 field of Reliance Industries to enable the plant to operate at least 70 percent of its capacity but is currently getting only 3 mmcmd.

Meanwhile, Power Ministry has also asked the companies not to set up any new gas-based projects till 2015, due to scarce availability of the fuel.
    
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. Domestic gas is priced at USD 4.2 per million British thermal unit while imported liquefied natural gas (LNG) is priced at four times this rate.