Govt allocates 40% of initial output of KG-D6 to power sector

The government today confirmed allocation of 40 per cent of initial gas output from Reliance Industries Ltd’s (RIL’s) eastern offshore KG-D6 fields to the power sector but said distribution among individual firms will be decided later. An Empowered Group of Ministers (EGoM), headed by External Affairs Minister Pranab Mukherjee, gave its stamp of approval for allocation of 18 out of the initial 40 million cubic metres per day of gas output from KG-D6 for the power sector. “An Implementation Committee, comprising officials of ministries of power and petroleum, will decide on which power plant will get what volume,” a senior official said. The EGoM, he said, typically does not decide on company-wise allocation and has till now only done sectoral distribution of the gas under the Gas Utilisation Policy. “Previously, the EGoM had decided that the gas from KG-D6 will have to first meet the fuel demand of urea making fertiliser plants. Thereafter, an Implementation Committee comprising official of ministries of petroleum and fertiliser chalked out plant-wise allocation, based on which Reliance and fertiliser companies sign gas sales and purchase agreement (GSPA) late last month,” he said. The EGoM also decided that any unutilised portion of the 5 mmcmd gas allocated for city gas projects will be given to existing gas-based power plants. None of the ministers attending the one-hour long meeting commented on the deliberations citing model code for elections. At present, gas-based power plants are facing a deficit of about 36 million cubic metres per day.The EGoM meeting was originally scheduled for last month itself but had to be postponed after a senior MP complained to the EC that the ministers’ panel was going to allocate the gas to power plants in Andhra Pradesh and Maharashtra, giving the ruling Congress party in the two states an edge in elections. The Election Commission (EC) allowed the meeting to take place with the condition that no decision will be announced.The EGoM meeting had been necessitated with the beginning of gas production from the KG-D6 fields. Production is slated for a quickly ramp up to 20 million cubic metres per day by next month, creating surplus beyond the about 15 mmcmd allocation made to 15 urea making plants.The gas utilisation policy gives topmost priority to urea plants, after which up to 3 mmcmd gas is to be given to LPG extraction plants. Thereafter, 18 mmcmd gas would go to power firms and another 5 mmcmd to city gas projects for retailing CNG to automobiles and piped cooking gas to households.KG-D6 is to produce 10 mmcmd this month and would ramp up the output by the same volume every month to reach 40 mmcmd, the initial volume of which the EGoM has decided to distribute among different sectors. He said power plants in Andhra Pradesh will be allocated gas for utilising 70 per cent of their installed capacity (known as Plant Load Factor). For the rest of the country, the allocation would be at 60 per cent Plant Load Factor.