The government is set to revise its priorities in allocation of natural gas, by putting city gas distribution at the top, followed by atomic energy, urea plants, power and domestic LPG. It will also make this allocation policy uniform, meaning the order of priorities will be the same irrespective of what source the gas is from.
Currently, top priority in gas allocation is accorded to fertiliser, followed by the power sector, although 100% of the city gas sector’s needs are met by domestic gas as per a Gujarat High Court order issued last year.
The new proposals will have to be approved by the Cabinet committee on economic affairs.
Domestic gas is divided into four categories in terms of sourcing — administered price mechanism (APM) gas, non-APM gas available from nominated blocks of ONGC and Oil India, pre-NELP gas and NELP gas.
“Domestic gas is allocated to various sectors based on guidelines issued by the government from time to time. Though policies broadly have similar order of priority, there are certain ambiguities and anomalies and inconsistencies, which are required to be removed in order to rationalise the gas utilisation policy. The proposal would be sent to the Cabinet shortly,” a government official privy to the development told FE.
In the revised policy, city gas for transport and domestic cooking gas (piped gas) tops the priority list, followed by plants providing inputs to strategic sectors of atomic energy and space research.
The rest of the hierarchy includes: gas-based urea plants, power stations supplying to state-run discoms and gas-based LPG plants.
“Strategic sectors such as atomic energy and space research, where absolute requirement is not very high in quantitative terms, but whose need has to be fulfilled on topmost priority, are not getting non-APM and NELP gas due to lower priority accorded to them,” said the official.
On August 23, 2013, an empowered group of ministers (eGoM) during the previous UPA rule, decided that incremental production of NELP gas will be allocated to the power sector after first ensuring supply of 31.5 mmscmd to the fertiliser sector.
Now, the NDA government under petroleum minister Dharmendra Pradhan wants to ‘remove these anomalies’ and rationalise the gas utilisation policy.
In 2013-14, both government and private sector oil and gas exploration companies produced 76.7 million metric standard cubic metre per day (mmscmd) of gas. This was nearly 70% less than the total allocated volumes of 243 mmscmd.
Last fiscal year, fertilizer plants received 29.79 mmscmd; gas-based power plants got 25.59 mmscmd, while LPG plants received 1.83 mmscmd. Petrochemical plants received 3.32 mmscmd while refineries got 1.89 mmscmd and steel plants 1.32 mmscmd.