The petroleum ministry will approach a ministerial panel for a road map on a gas price pooling mechanism to help the power sector absorb the high costs of imported liquified natural gas (LNG) and prevent investments of over R1 lakh crore from becoming non-performing assets.

Petroleum minister M Veerappa Moily said on Wednesday that he will move a note for the consideration of a high-powered ministerial group to change priority of allocation of the fuel as well as pooled pricing of imported and domestic gas. Moily was talking to reporters after meeting with a delegation of power producers including Anil Ambani (Reliance Power), GM Rao (GMR) and Madhusudan Rao (Lanco).

All decisions relating to pricing and commercial utilisation of gas are taken by an empowered group of ministers (EGoM), which is expected to meet soon.

?In fact, our ministry follows the decision of the EGoM. Hence, the right course of action is to convene the meeting of EGoM, place these matters before them, and seek revision of the priority sectors,? Moily said.

?They (heads of power companies) have suggested solutions to overcome gas shortage to power projects spread all over the country. Around 24,000 MW of power (natural gas) has been denied, and they are partially or fully non-operational,? he added.

Most of these investments were made on the hope of gas availability from RIL?s D6-block where production has now dipped drastically.

While the landfall price of domestic gas is at $4.2 per million British thermal unit (mmbtu), imported LNG could cost as much as $12 per mmbtu. Given the wide gap between the prices of domestic and imported gas, the power producers suggested price pooling of domestic and imported gas to help the power sector absorb the costly LNG. Significantly, efforts to devise a similar mechanism for coal are already at an advanced stage.

?If the government does not implement such a mechanism, then nearly 24,000 MW gas-based capacity could become NPAs,? said Association of Power Producers director-general Ashok Khurana.

power FIRMS want price pooling of domestic and imported gas to help absorb higher costs of lng