After directing Reliance Industries to first meet the natural gas requirement of priority sector like power and fertilisers before giving the fuel to other customers, the government is now considering a similar move on gas produced by state-owned ONGC and Oil India from their nominated fields. The idea is to find enough fuel for the new power capacities to come up in the current Five -Year Plan period.
Of the 55 million standard cubic metre a day (mscmd) gas produced by these two companies from nominated blocks, the government will be able to free up about 10-15 mscmd gas for new power plants by restricting supply to non-core consumers. This would enable all new power projects being comissioned by March 2012, to get gas to run plants at close to 60% of their rated capacity.
Now, the power sector gets about 25 mscmd and the fertiliser sector gets about 15 mscmd of gas from nominated fields at an administered price of $4.2 million British thermal unit. What remains of the 55 mscmd APM gas goes mainly to consumers having allocations less than 0.05 mscmd. A few buyers covered under certain court orders also get APM gas.
The government hopes to release gas from the nominated fields by restricting supply to non-power non-fertiliser buyers to augment power generation to meet the needs of the second fastest growing major economy in the world, sources privy to the development said. Gas-based power projects have low gestation period and can be commisioned in a short period of 18 months.
Gas allocation for these new projects could fresh lease of life capacity addition programme of the Centre that is already running well short of its target for the 11th Plan. In the current Plan, government planned to add 62,000 mw of new generation capacity but the Plan is expected to end with just about 45,000 mw. Gas to new projects could add another 8,000 mw of the generation capacity.
As per power ministry?s communication to the petroleum ministry, 10 power projects with an estimated capacity of 7,919 mw are set to be commissioned by April 2012 when the 12th five year plan commences. Some of these projects, including Reliance Power?s 2,400 mw Samalkot project, RVK Energy?s 436 mw gas project, 100 mw Panduranga project, Torrent Power ?s 1,200 mw DGEN project and GSPC?s 700 mw Pipavav power project, are closer to getting commissioned. Together, they need about 28 mscmd of gas for running on full capacity.
Even if 10 mscmd of APM gas could be diverted to the new power projects, they could still run at a little less than half their capacity. If some of these projects get delayed, then the others could get more gas, sources said.
Another option being weighed by policy makers is to pool the diverted APM gas with imported re-gasified liquified natural gas (RLNG) so that the low price of the domestic gas helps in moderating the RLNG price. Besides APM gas, power companies also get gas from Reliance Industries? KG D6 block in the Krishna Godavari basin and Panna-Mukta-Tapti (PMT) fields operated by British Gas, RIL and ONGC.
