New gas policy may prefer new plants to expansion projects

The government is believed to be in the final stages of formulating a gas allocation policy, which is likely to give preference to new power plants over expansion projects.

"The (gas linkage) policy may be broadly based on the coal linkage policy," a power ministry official said.

As per the coal linkage policy, first priority is accorded to power projects of the central sector PSUs like NTPC, state sector utilities like APGENCO (Andhra Pradesh Generation Company) and projects to be bid out by states on tariff based competitive bidding, followed by independent power projects (IPPs) and captive power plants.

In the new policy, which is likely to be called the Gas Linkage Policy, the government is mulling the option of giving preference in allotment to greenfield (new) power projects over brownfield (expansion).

"May be new projects are given priority over the existing ones in the gas policy," he said, adding that the modalities of the policy are being worked out.

If the government decides to allocate gas to the new projects before the existing ones, the move may seriously impact state-run NTPC's gas-based capacity addition plans.

NTPC had earlier said it would request the Power Ministry to take its proposal for the allotment of 30 MMSCMD (million standard cubic metres per day) of gas for its expansion projects, forward to the Oil Ministry.

NTPC, currently, has a gas-based power generation capacity of about 4,000 MW and the company requires additional gas for its expansion projects other than Kawas and Gandhar in Gujarat.

The power utility is fighting a case with Mukesh Ambani-led Reliance Industries in the Bombay High Court for gas supply to its Gujarat projects.