Power Ministry favours natural gas allocation for Reliance Power's Samalkot expansion unit in Andhra Pradesh

The Power Ministry has favoured allocation of the bulk of new natural gas output from fields, like those of Reliance Industries , to Anil Ambani-run Reliance Power's Samalkot expansion unit in Andhra Pradesh. Power Minister Sushil Kumar Shinde's ministry on October 6 wrote to the Cabinet Secretariat seeking amendments in the minutes of the meeting of Empowered Group of Minister (EGoM), held on July 28, to include seven instead of four projects for allocation of natural gas. 

The seven projects include 2,400-MW expansion project planned by R-Power at Samalkot that would need 8 million standard cubic meters per day of fuel, sources in know of the development said. The projects are the ones that will come up in the 11th Five Year Plan period ending March 31, 2012, the ministry insisted. 

In the letter, sources said, the power ministry pointed out that it had send a list of seven power projects to be included in this category but only four projects were mentioned in the annexure of the minutes of the EGoM that considered the issue of giving gas to 10 projects. 

"The list of (four) plants was not in the draft minutes prepared by this (power) ministry. The list has been added in the office of Finance Minister and Chairperson, EGoM. It seems that three power projects, which belong to the same category and had been sent by Ministry of Power earlier than the four power projects included in the Minutes of Meeting, have been inadvertently left out from the list," the ministry wrote. 

The EGoM, however, did not make any new allocation, as additional output of 20 mmscmd from RIL's eastern offshore KG -D6 fields is only expected in 2012-13, while state-owned Oil and Natural Gas Corp (ONGC) is to produce around 9 mmscmd more gas in 2011-12. Another 8 mmscmd is expected to be available from GSPC's KG Basin fields in 2012-13. 

Sources said the Power Ministry told the Cabinet Secretariat that Samalkot, along with six other plants, was expected to be commissioned in the current Five-Year Plan, ending March 31, 2012. 

The ministry sought allocation of 20.96 mmscmd for the seven projects. It recommended allocation of 8 mmscmd gas for the 2,400-MW expansion project, planned by R-Power at Samalkot, as it had environmental clearance, besides "land, water and all other infrastructure facilities." Also, it has executed an EPC contract on July 21, 2010. 

The ministry sought 4.48 mmscmd gas for the 1,200-MW project that Torrent Power is setting up at the Dahej SEZ in Gujarat, 0.4 mmscmd for the 100-MW unit of Pandurang Energy Systems in West Godavari District of Andhra Pradesh and 1.62 mmscmd for the 436-MW plant of RVK Energy in East Godavari District, also in Andhra Pradesh. Another 1.4 mmscmd was sought for 382.5 MW Sugen Phase-1 in Gujarat and 2.53 mmscmd each for 800 MW Jegurupadu expansion and 800 MW Gautami Stage-II, both in Andhra Pradesh. 

Sources said the EGoM did not make any allocation to any plant, as RIL had informed it of its inability to produce more than 60 mmscmd gas from KG-D6 at present. All of the current output of 60 mmscmd from KG-D6 has already been allocated to urea manufacturing units, power plants, LPG units, city gas projects, steel plants and refineries.