New gas policy to end your power woes soon | business | Hindustan Times
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New gas policy to end your power woes soon

business Updated: Jun 17, 2013 00:27 IST
Anupama Airy

Frustrated over power outages? The end may be in sight soon for your electricity woes.

The government is expected to take several major administrative decisions this month, which will give a new lease of life to around 26,800 mw of stranded and ready-to-be commissioned gas-based power projects.

The Cabinet Committee on Investment (CCI), headed by the Prime Minister, is expected to give a go-ahead for according priority to gas allocation for the power sector, on par with fertiliser, when it meets shortly.

Diversion of gas from non-core sectors to power projects and fresh allocation of gas from new finds to the cash strapped power sector are also expected to get CCI clearance.

A note prepared by the power ministry on the behest of the Prime Minister’s Office for consideration of the CCI (a copy of which is available with HT) calls for diverting 6 million metric standard cubic meters per day (mmscmd) of domestic natural gas from non-core sectors to power, and the allocation of domestic gas of 11.71 mmscmd to the power sector on priority.

A similar proposal, by power minister Jyotiraditya Scindia, is before the petroleum ministry.

“If gas-based power generation capacity is stranded due to non-availability of affordable gas supply, the same would put at risk huge loans of FIs turning into non-performing assets... it will also affect the power procurement plan of distribution companies, which would have to buy-short term power at exorbitant prices to meet demand of priority sectors like agriculture.”

The note added that “non-performance of such investment could have a cascading effect on overall finance sector of India, impacting availability of finance for future power projects.” Gas-based power accounts for 9% of India’s installed capacity.

The CCI is also expected to announce its verdict on the methodology proposed by various expert groups such as the Soumitra Choudhary, Chanda Kochhar and B K Chaturvedi panel for pooling domestic and imported gas prices for the power and fertiliser sectors.

The dwindling gas supply from Krishna Godavari KG D6 has been a cause of alarm for the power sector, and has upset the gas-based capacity addition programme. The supply of gas from the KG D6 block has become zero since March this year.

"While fertiliser can be imported, power cannot be imported and will impact the irrigation to agriculture sector.... method being adopted for proposed pooled price within power and fertiliser sector is a transparent measure. GAIL may be appointed as pool operator as suggested by petroleum ministry," the note observed.