EGoM on gas to meet on August 14 on power plant allocation

With over $21 billion of power projects stranded for want of fuel, a ministerial panel may meet on August 14 to consider diverting a small volume of gas from non-priority users to fuel-starved generation plants.

The Empowered Group of Ministers (EGoM) may consider giving as much as 2 million standard cubic meters per day of gas to power plants this fiscal to generate about 480 MW of electricity, official sources said.

The gas will come from the western offshore fields of Panna/Mukta and Tapti, they said, adding that while squeezing out gas from the current year's output of 105 mmscmd would be difficult, things will improve in 2015 with 10 mmscmd of additional output.

The power sector's woes are due to a fall in production at Reliance Industries' eastern offshore KG-D6 field to under 14 mmscmd. Output is projected to drop further to 11 mmscmd this fiscal before rising to 19 mmscmd in the first quarter of 2015 and remain at that level till 2016-17.

The decline in KG-D6 output from 62 mmscmd achieved in March 2010 means 25 power plants that signed up for 29.74 mmscmd of KG-D6 get no gas supplies.

Sources said on instructions of the EGoM, the Oil Ministry carried out a detailed exercise to assess additional gas available and demand.

About 4-5 mmscmd of additional gas will be available from the fields of ONGC and GSPC in 2013-14. A similar volume may be produced in the next fiscal and a further 2 mmscmd from GSPC in 2015-16.

This additional production will make up for the shortfall that fertilizer plants will face with the further fall in output at KG-D6 and also help to meet 3.8 mmscmd needed by five newly converted fertiliser plants, for which allocation had previously been approved by the Cabinet and EGoM.

Also, 2.95 mmscmd has to be given to LPG extraction plants of GAIL and ONGC, they said, adding LPG has been given second priority after urea manufacturing units.

Moreover, there will be an additional demand of 2.17 mmscmd of gas for ONGC's petrochemical plant at Dahej. At the time of prioritising gas allocation, the EGoM had taken a call that all molecules from the gas should be extracted before it is burnt as fuel. ONGC's C2/C3 plant fits into that priority.

Sources said out of the additional 4-5 mmscmd of gas in 2014-15, 2-3 mmscmd would be available for the power sector. Most of this will flow to the Dabhol power plant, which had been given equal priority as fertiliser plants after its revival at a cost of Rs 13,000 crore. No KG-D6 gas flows to the plant now, although it had been allocated 7 mmscmd.

Additional availability of about 10 mmscmd during 2015-16 could be provided for the power sector, sources said, adding further supplies of 29 mmscmd from ONGC during 2016-17 and 11 mmscmd from RIL's R-Series fields in the KG-D6 block in 2017-18 would be sufficient for power and fertiliser plants.

For the present, the power sector may be asked to consider buying more imported LNG to produce electricity.

Currently, only a third of the 72 mmscmd of gas needed by 18,713 MW of power plants is being met. While another 8,000 MW of capacity is almost ready for commissioning, there is no gas available to fire the plants.

At its previous meeting, the EGOM rejected a proposal to snap natural gas supplies to urea plants and divert the fuel to power companies.