Ministers' panel may not allocate gas to new customers

The much talked about meeting of a ministerial panel on natural gas next week is likely to deliberate on availability of gas in the country over next few years but may not allocate any fuel to any new customers.

The empowered group of ministers (EGoM), headed by Finance Minister Pranab Mukherjee on July 27, is likely to discuss setting priority for usage of the gas that is likely to be available in next five years, two sources privy to the development said.

It ask for requirements in power and fertiliser plants coming up in future to be put up to it for a possible allocation from the projected additional gas output at a later date.

"Currently, no power plant connected with pipeline network, is starved of gas. Those commissioning this year have already been allocated gas," one of them said.
    
The Oil Ministry will make a presentation on source-wise and year-wise availability of gas and will also present a synopsis of the recent Supreme Court verdict on the Ambani gas dispute.
    
It may mention about Reliance Industries' eastern offshore KG-D6 field touching peak output of 80 million standard cubic meters a day in 2011-12 as well as beginning of production from Gujarat State Petroleum Corp's KG basin fields in 2012.
    
Over 15 mmscmd of gas from KG-D6 fields is available for allocation on firm basis as the government has already fixed users for over 64 mmscmd. GSPC's field will produce 8-9 mmsmcd while state-run Oil and Natural Gas Corp's Bay of Bengal fields would produce 25-30 mmscmd from 2016.
    
Sources said power ministry may put up the schedule of commissioning of new gas-fired power plants and their fuel requirement.
    
The EGoM would deliberate on how much gas and from what source can be allocated to plants commissioning sequentially, they said adding the issue of fuel for projects that haven't yet started construction may also come up for discussion.
    
Anil Ambani Group firm Reliance Power has sought 28 million standard cubic meters per day of gas for its proposed plants at Shahpur in Maharashtra and Brauch in Gujarat and expansion of its Samalkot plant in Andhra Pradesh.
    
It was not clear if the EGoM can consider giving gas to the ADAG plants as such a move may open pandrox box with several power plants at conception stage too would seek treatment at par with R-Power and allocation of gas.
    
Also, the EGoM has to consider requirement of fertiliser plants that are switching from liquid fuel to gas as feedstock, sources said.

As per the Government's Gas Utilisation Policy, whose validity has been upheld by the Supreme Court, natural gas can be allocated only to an end user who can consume gas immediately.
    
Sources said the EGoM will have to decide if exceptions to the present policy can be made so that proposed power plants like those of R-Power can get fuel from KG-D6 fields by reserving or blocking certain volumes for it.
    
At present, the Gas Utilisation Policy does not provide for reservation or blocking of natural gas for future plants and all of the output from KG-D6 fields has been allocated to units that said could consume the fuel immediately.
    
Since KG-D6 fields has finite resources, output will have to be capped and volumes above that reserved for production when plants like those R-Power are built.
    
Alternately, the government will have to cut supplies to existing customers to accommodate future plants.
    
RIL has till date signed up for 57.8 mmscmd of its output on long term contract. It has told the Oil Ministry that it can sign up for another 2.2 mmscmd on long term since output from KG-D6 can be sustained only at 60 mmscmd.
    
The apex court had in May rejected ADA Group firm RNRL plea to get gas from RIL at concessional rates of USD 2.34 per mmBtu for 17 years under a family agreement, saying government alone has the right to approve the price and fix its users.
    
An Oil Ministry official had earlier stated that ADAG plants may be considered for allocation of gas six months prior to the commissioning.
    
"Anyone wanting natural gas for their plants, be it in fertiliser, power or any other sector, the allocation is to be made (to them) closer to the time when they can actually consume that gas," he had said.