EGoM on gas postponed

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A meeting of the Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee that was scheduled for February 14 to consider changes in the natural gas allocation policy, has been postponed.

"There is no written communication but we have been verbally told that the meeting will not happen on February 14," an oil ministry official said.

No new dates have been fixed.

The EGoM meeting, the first in more than 18 months, was to consider changes in gas allocation in view of sharp drop in output from Reliance Industries' eastern offshore KG-D6 block.

The Oil Ministry had proposed to the EGoM to stop gas supplies to power producers that do not sell electricity at regulated tariff and cancel allocation to a few merchant power plants in Andhra Pradesh that currently sell electricity at way above the tariff determined by the sector regulator.

Also, it proposes making future gas allocations to only urea fertiliser plants and fuel supply to phosphates and potassium fertiliser producers be stopped.

KG-D6 gas output has fallen to below 39 million cubic meters per day after touching peak of 60 mmcmd in March 2010, prompting the ministry to suggest changes in the allocation policy.

The official said the requirement of 13.22 mmcmd of gas for urea plant beyond 15.7 mmcmd that has already been allocated from KG-D6, would be placed before the EGoM.

Similarly, the requirement of 31.81 mmcmd gas for 14 power plants with a total capacity of 7,219.5 MW that are to be commissioned in 11th Five Year Plan period ending March 31, would be placed before the ministerial panel.

Currently, power plants have been allocated 32.67 mmcmd of KG-D6 gas.

Also, the admissibility/quantum of marketing margin charged by RIL on sale of KG-D6 and the oil ministry decision to ask Petroleum & Natural Gas Regulatory Board (PNGRB) to regulate marketing margins would be placed before the EGoM.

Power Ministry's proposal to ask RIL to sign an agreement to supply 2.16 mmcmd of gas to NTPC may also figure in the EGoM meeting whenever it is next scheduled, the official said.

RIL not signing pact for supply of 2.74 mmcmd of gas out of the 4.46 mmcmd of allocated to five power projects may also figure in the EGoM meeting whenever it is scheduled next, the official said.

RIL had not signed Gas Sale Purchase Agreement (GSPA) for 2.74 mmcmd including 2.16 mmcmd to state-owned NTPC, in view of falling KG-D6 output.