Supreme Court judgment leads to gas-power gold rush - Current capacity of gas-based power in the country is only around 30-35 mmscmd

The Union government announced that it had got applications for the allocation of 550 million cubic metres of natural gas from prospective power producers, making any deal between the Ambani brothers for future gas supply less likely.A recent Supreme Court judgment had held that it was up to the government of India to allocate gas, even if it is produced by a private company.Jitin Prasada, minister of state for petroleum and natural gas, said the Centre has received applications for the allocation of a whopping 550 million cubic metres (mmscmd) of natural gas a day from those who wish to set up new gas-based power plants.The current capacity of gas-based power in the country is only around 30-35 mmscmd.The Centre had recently allocated around 18 mmscmd of gas for power plants from an expected production of 80 mmscmd from Reliance Industries' KG D6 block in the Bay of Bengal.The total gas production in the country is only around 135 mmscmd, split equally between government companies and Reliance Industries.The new applications are likely to be bad news for the Anil Ambani group, which has been trying to secure an assurance of gas for its planned power plants totalling 28 mmscmd.

A recent ministerial meeting on gas allocation, which was widely expected to change existing gas policy to allow the Mukesh Ambani group to promise gas to the Anil Ambani group, failed to arrive at any such decision.A high level of demand, of the order of 550 mmscmd, is likely to make it difficult for the government to allow the two Ambani groups to enter into a contract for future gas supply.Prasada also announced that oil-marketing companies like Indian Oil Corporation and Hindustan Petroleum will no longer conduct interviews for the award of LPG dealerships, to combat corruption. He said such awards will now be done by drawing lots.Prasada said Reliance Gas Transportation Infrastructure Limited (RGTIL), a private company owned by Mukesh Ambani, is the only private firm permitted to build pipelines in the country. In addition to the existing east-west pipeline, the company has been granted permission to lay pipelines from Chennai to Mangalore through Bangalore, from Chennai to Tuticorin and to Vijaywada, and to extend its pipeline from Kakinada in Andhra Pradesh to Howrah in Bengal.