EGoM on natural gas allocation on June 9

The Empowered Group of Ministers on Pricing and Utilisation of Gas headed by Finance Minister Pranab Mukherjee is scheduled to meet in second half of June 9 to consider giving gas for generating electricity to meet peak summer demand, sources in know of the development said.

Power Ministry has sought allocation of gas for nine power projects including NTPC’s Kawas Station-II (1,200 MW), Gandhar Station-II (1,300 MW) and RGCCPP-Kayamkulam Station-II (1,050 MW). Also, Andhra Pradesh Power Generation Corp has sought about 9 million cubic meters per day of gas.

Besides, the request of the power ministry for converting fall-back allocation of three power plants into firm or permanent allotment is likely to be considered at the EGoM.

The EGoM had in 2009 allocated 12 mmscmd gas from KG-D6 to power plants on fallback or temporary basis. Of this, the power ministry now wants one-fourth to be converted into firm allocation, they said.

However, with output dipping at Reliance’s KG-D6 fields, there isn’t gas for allocation to new plants. In the week ended May 22, KG-D6 produced about 48 mmscmd. Of this, 14 mmscmd was sold to fertiliser plants and another 26.5 mmscmd to power plants.

The remaining 7.5 mmscmd was consumed by other sectors like sponge iron plants, LPG, city gas distribution networks and petrochemical/refineries.

The only gas available for allocation is about 3 mmscmd from western offshore C-Series fields of state-owned Oil and Natural Gas Corp (ONGC).

Sources said the EGoM may serve as the ratification authority of oil ministry’s decision to curtail supplies to non-core sectors like steel plants in view of fall in output at KG-D6 fields.

Oil Ministry has ordered Reliance to meet the full requirement of consumers in priority sectors of fertiliser, power, city gas distribution and LPG plants and supplies to non-core sectors be made only if there is gas left after that.

Priority sector has been allocated over 47 mmscmd of KG-D6 gas, leaving very little for non-core users.

Essar Steel, whose supplies have come down to one-fifth of the contracted volumes, has challenged the oil ministry’s decision in Delhi High Court saying only the EGoM was competent to take such a decision.

The High Court has so far not stayed the decision but if it directs the oil ministry to get the decision ratified by the EGoM, the June 9 meeting will serve that purpose, sources said.