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Ministers group faces crunch in gas allocation

business Updated: Nov 10, 2010 21:51 IST
Anupama Airy
Anupama Airy
Hindustan Times
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The Empowered Group of Ministers (EGoM) on natural gas allocation faces a tough task with the demand for natural gas from core sector industries including power, fertilisers and gas distribution far exceeding availability of gas in the country.

Dividing the pie

The EGoM, headed by finance minister Pranab Mukherjee, was to meet on Tuesday to consider allocation for power projects due to start over the next two years but its meeting was postponed following the resignation of Maharashtra chief minister Ashok Chavan.

Government sources said a new date will be fixed shortly.

Highly placed government sources said an additional availability of 31 million standard cubic metres of gas (mmscmd) is expected by 2012-13 from the fields allocated under the New Exploration Licensing Policy (NELP).

This, including gas from Reliance Industries’ Krishna-Godavari basin field KG-D6 will hoist the country’s gas availability to 91 mmscmd by 2012-13 from the current 60 mmscmd.

But the total demand already stands at nearly 64 mmscmd.

Therefore, the EGoM is unlikely to make firm allocations to projects and may make indicative allocation on a pro-rata basis, the sources said.

However, the power and fertliser sectors may get 7.7 mmscmd following increased availability from ONGC fields in 2011-12, the sources said.

ONGC’s production is expected to increase to about 69 mmscmd in 2011-12.

The EGoM is also expected to consider gas allocation of 9.6 mmscmd to Anil Ambani-led Reliance Power’s 2400 megawatt (R10,000 crore) Samalkot power project.

The ministers are also expected to consider gas allocation for NTPC which is battling RIL in the Mumbai High Court on the issue.

Sources said the ministries of power, petroleum and law have agreed to forward NTPC’s case for allocating 9.7 mmscmd gas to the EGoM without waiting for a court decision. The price of gas—whether $2.1 or $4.2 per unit-- however, remains to be decided by the EGoM.