In what seen as a major victory for power minister Jyotiraditya Scindia, the petroleum ministry has proposed equal priority for allocation of natural gas to fertilisers, LPG, power and city gas distribution projects.
The petroleum ministry had, in a proposal for the empowered group of ministers (EGoM) on gas allocation, recommended abolition of the present system of prioritising core sector industries for gas allocation, highly placed sources told HT.
Indications are that the EGoM, scheduled to meet sometime this week, is expected to clear the petroleum ministry’s proposal. This is expected to release increased gas supplies for power production in the country.
The move will also reduce costly LNG imports currently being undertaken by the power sector at $14 per mmbtu (million metric British thermal units) as against the domestic gas price of $4.2 per mmbtu.
At present, fertilisers and LPG extraction units get priority over the power sector in the supply of natural gas produced from various blocks awarded under the New Exploration Licensing Policy (NELP).
“The proposal is ready for the EGoM meet and it is recommended that gas be allocated on pro-rata basis amongst all core sector users (power, LPG and fertilisers) based on the signed gas supply agreements,”a source said.
Pro-rata re-allocation would mean that higher gas supplies to fertiliser industry would now get diverted to the power sector. About 10 million standard cubic metres per day of additional gas may become available for the power sector.
In a recent interview to HT, Scindia had said that his focus was to see that the power sector gets an equal priority as the fertiliser plants when it comes to allocation of gas. Most gas-based power plants are stranded for want of gas supply.