EGoM to discuss ways to prioritize applicants seeking gas allocation

Concerned that the country would not have gas supply to the tune of over 450 million standard cubic metre per day (mmscmd) required for its Greenfield and Brownfield power projects in the foreseeable future, the Empowered Group of Ministers (EGoM) is likely to discuss ways of prioritizing the applicants through a three-way plan.

?Since the total demand for gas for the proposed Greenfield and Brownfield power projects exceeds 450 mmscmd and that production of domestic gas is unlikely to be achieved in the near future, there is a need for prioritization of applicants,? according to a note prepared by the Ministry of Petroleum and Natural gas for the EGoM headed by Finance Minister Pranab Mukherjee. One way to do so would be to allot gas on priority to central and state public sector utilities for which several requests were pending ?as they would supply the entire quantity of gas to grid at regulated rates,? the note says. ?Another alternative can be by inviting bids on fixed costs and variable costs of generation on lines similar to the Ultra Mega Power Projects (UMPPs), while the third alternative could be to allot gas to all entities in the public and private sector on the basis of preparation and the likely commencement dates with the stipulation that at least 80 per cent of power would be sold to SEBs at rates approved by the power regulator,? according to the ministry.

The power ministry has prepared a list of 78 plants, which have sought for gas allocation totalling 488.48 mmscmd, excluding those already under construction. Of these, 90.46 mmscmd is for expansion projects, while the remaining 398.02 mmscmd is for Greenfield projects.

In view of the paucity of domestic gas against the huge demand registered, a policy decision needed to be taken whether any new power plant would be given gas only to the extent of 50 per cent of its capacity requirement on a particular day, the note said. ?The power project would source its remaining requirement from LNG for which sufficient capacities exist. The project may be given additional domestic gas on a fallback basis if there are no takers,? the ministry said. Initially the availability of gas from KG D6 fields was expected to increase substantially and it was even reported in some quarters that gas production would increase to 120 mmscmd within a year of commencement of production and to higher levels thereafter. However, the reality of production since 2009 has been different and it has not gone beyond 60 mmscmd and it is unlikely to increase in the near future. State-run behemoth ONGC is likely to commence production of natural gas from its C series on the western coast at a price of $5.25 per mmbtu till March 2014. Out of the allocations made for KG D6 gsa, 7.88 mmscmd on a firm basis and 0.548 mmscmd on a fallback basis have been made to customers in the Uran region.

Source: The Indian Express, Delhi, 27 July, 2010
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