The government will soon come out with new guidelines for allocating gas to power projects going in for capacity expansion and greenfield projects in advanced stages,with more gas becoming available from various sources including Reliance’s Krishna Godavari basin fields. The biggest beneficiary of the fresh allocation of fuel will be NTPC, which has lined up over 7,500 MW of new and expansion projects using gas.
Gas is currently available only to power projects that are stuck due to fuel shortage. However, the power ministry will create a priority allocation list based on projects’ level of preparedness, regulatory clearances and timely execution, a government official said. “The priority list will form the basis of providing gas linkage to projects that will then have to be approved by the empowered group of ministers (EGoM),” the official added. The guidelines will be finalised within a month, said a petroleum ministry official. The EGoM on gas allocation is headed by finance minister Pranab Mukherjee.
The EGoM will have to decide on gas allocation for a new set of consumers for Reliance Industries’ KG D-6 block. The field currently supplies gas to existing power plants and consumers in fertiliser, petrochemical and city gas distribution sectors. Additional gas has also become available from Cairn’s field and from ONGC. Allocation of gas for greenfield power plants will broadly depend on net worth, internal resource generation capacity, annual turnover and “the readiness of a plant to receive gas,” said the official quoted earlier. This could mean that a proposed power plant that has already acquired land and received the initial regulatory clearance would be given priority over others in gas allocation.
First preference would be given to fertilizer units followed by existing LPG projects, and then gas-based power projects lying idle due to no supply of fuel, city gas distribution projects, refineries and other industries. These would include petrochemical plants and gas-based steel plants which are not receiving gas supply in accordance with the commitments made earlier.
“Under the new guidelines, state-run firms’ expansion projects of 1000 MW and more would be given top priority. This is because the projects would have a shorter gestation period and need fuel at the earliest,” said a power ministry official who did not wish to be named.
Gas-based projects proposed to be commissioned in the 11th and 12th Plan will benefit the most from the new guidelines. Work on about 7000 MW of projects proposed for the 11th Plan and another 20,000 MW in the early part of the 12th Plan has not progressed due to the lack of clarity over allocation of gas.
NTPC’s total requirement, excluding the Kawas and Gandhar expansions where a gas supply dispute is currently being heard in the Bombay High Court, is around 30 mmscmd. Besides, gas for new projects could benefit APGenco’s 2100 MW Karimnagar project, Haryana government’s 1500 Faridabad project and Mahagenco’s 1040 MW Uran expansion project.
A few private sector projects such as those of Reliance Energy in the Maharashtra, Gujarat and Andhra Pradesh will also benefit. The power ministry had earlier sought about 40 million standard cubic metre per day (mmscmd) of gas from oil and gas ministry for new power projects.
The ministry is now waiting for official validation of production from Reliance Industries’ KG D-6 block beyond the proposed levels of 60 mmscmd of gas to seek additional allocation. RIL’s KG D-6 block currently provides about 52 mmscmd of gas to customers in fertiliser, power, petrochemicals sectors on a firm basis and another 10 mmscmd gas on a fallback basis.
A fallback allocation implies that the sector will get gas if the firm allocation of other sectors is not fully consumed due to some reason. The total approved production of the block is 80 mmscmd while estimates suggest production could be scaled up to about 120 mmscmd.
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