India?s natural gas output is plunging owing to the sharp drop in production from Reliance Industries? D6 block in the Krishna-Godavari Basin. Nevertheless, the government is under pressure to change its gas allocation policy in favour of the power sector.
A parliamentary panel has sought topmost priority for the power sector, the rapid development of which is integral to sustained levels of high economic growth, in allocation of existing and future domestic gas supplies.
As of now, the fertiliser sector is given the highest priority in gas disbursal, followed by the city gas sector in the government?s policy for utilisation of the hydrocarbon resource. Power comes third on the priority list.
?Considering the fact that the power sector plays an important role in economic development of the country…, the committee would like to re-emphasise that the sector needs top priority in allocation of gas,? the standing committee on energy has said in its latest report.
The oil ministry has assured the panel that it would seek guidance from the latter?s recommendation.
“The committee’s recommendation to attach high priority sector to the power sector in the allocation of gas noted for guidance,” the ministry said in the action taken report.
The fertiliser sector has been given the top priory in gas allocation because the product is subsidised and the central government has to bear the subsidy, while city gas distribution is important to check vehicular pollution in metros.
Gas-based projects totalling 4,200 MW commissioned during the 11th Five-Year Plan are unable to start operations due to non-availability of gas.
?Gas-based power plants are not able to fully utilise their capacity due to fuel shortage. Better allocation of gas for the power sector will be a welcome step,? said PTC India chairman Tantra Narayan Thakur.
The fall in production from RIL’s D6 has aggravated the gas shortage for the power sector. The block was expected to reach peak production of 80 million metric standard cubic metres per day (mmscmd) by the end of 2012. But instead production from the field has dropped to 34 mmscmd and is projected to further fall to 20 mmscmd by 2015.
India is projected to face a domestic gas shortfall of 20-25% over the long term despite an increase in production. In the short term, the country is meeting the gas shortfall by importing liquefied natural gas. To meet its long-term shortfall, the government is trying to tie up piped gas supplies from Turkmenistan and Iran.
