Companies approves rejig of gas policy; city gas to get top priority

Issue will now go to the CCEA for final approval

A Committee of Secretaries has approved a rejig of natural gas allocation policy, giving city gas distribution firms like Indraprastha Gas Ltd top priority for allocation of domestically produced fuel.

The CoS approved a proposal of Oil Ministry for changes in priority ranking for gas allocation, official sources said. The issue will now go to the Cabinet Committee on Economic Affairs (CCEA) for final approval.

At present, urea-manufacturing fertiliser plants have the first right over the domestically produced gas, followed by liquefied petroleum gas (LPG) plants and power stations. City gas distribution (CGD) projects are ranked fourth in the priority list.

The CoS agreed to change this priority listing to give CGD firms like IGL, which sells CNG to automobiles and piped gas to households in the national capital, top priority, they said.

CGD firms like IGL currently get 8.32 million standard cubic meters per day of gas out of total domestic supplies of about 77 mmscmd.

As city gas projects get rolled out in new cities, the requirement of the sector will grow and so the government is now giving it top priority.

Sources said compressed natural gas (CNG) and piped natural gas (PNG) are clean fuels and will help replace subsidised diesel in automobiles and LPG in households respectively.

According to the new allocation policy, additional requirement for CGD will be first met by imposing proportionate cuts in the domestic gas presently being supplied to sectors other than priority sectors as decided by the Oil Ministry.

Plants providing inputs to strategic sectors of atomic energy and space research will get the second priority, followed by plants that can extract higher fractions from natural gas.

Gas-based urea plants will rank fourth in the priority list and power stations fifth.

Since domestic gas production is now stagnant, it is being proposed to freeze allocation to all sectors expect CGD and LPG sector, at supply levels of 2013-14.

In 2013-14, fertiliser plants received 29.79 mmscmd of gas. Power plants got 25.59 mmscmd while LPG extraction plants received 1.83 mmscmd. Petrochemical plants received 3.32 mmscmd while refineries got 1.89 mmscmd and steel plants 1.32 mmscmd.

Sources said incremental production from NELP blocks like KG-D6 and Gujarat State Petroleum Corp's (GSPC) Deendayal gas will be allocated as per the decision taken in the meeting of an Empowered Group of Ministers (EGoM) on August 23, 2013.

The EGoM had decided that incremental gas would go to power plants.

The requirement of CGD project is quite small compared to power and fertiliser sectors and can be met through proportionate cuts, they said.