NTPC to get KG gas at $4.2 for 'other' plants

NTPC and RIL are fighting a case in the Bombay High Court over gas pricing for the former's Kawas and Gandar power plants. NTPC is demanding that RIL stick to the price of $2.34, which RIL had bid in a global tendering process initiated by NTPC five years ago. RIL, on the other hand, wants NTPC to pay $4.2 per mBtu. The dispute had threatened to block all gas supply from RIL's KG basin to all NTPC plants. These account for a substantial chunk of the country's total gas power generation capacity. The eGoM has decided against making any allocation for industrial sectors, such as petrochemicals, refinery and steel, leaving it for later when the KG production goes beyond 40 million cubic metres per day (mcmd). The eGoM, which warned the members against "giving any publicity" to the decisions taken, also authorised the ministry of petroleum and natural gas (MoPNG) and the ministry of power (MoP) to jointly "take decisions" regarding the diversion of unutilised gas to power plants. The two ministries have also been authorised to increase the target utilisation level of the power plants if gas is found to be more than estimates. Gas-based power plants in India are running way below capacity - as much as less than half - due to non availability of fuel. Those capable of running on gas as well as liquid fuels run at higher capacities by using much costlier naphtha and diesel. Similarly, fertiliser units are producing less than capacity because of the shortage of gas. The government's gas utilisation policy accords topmost priority for allocating 15 mcmd of gas to fuel country's fertiliser plants, followed by provision of 3 mcmd for extracting and selling liquefied petroleum gas, 18 mcmd to country's gas-fired power generation units, and 5 mcmd to city gas distribution projects, including fuel for automobiles and for domestic cooking. RIL, which earlier this month started producing gas from the KG-D6 block awarded to it in the pre-New Exploration Licensing Regime, expects to ramp up the output to 40 mcmd in next three months. The eGoM had earlier January noted that the gas production from KG-D6 is expected to reach plateau of around 80 million metric standard cubic meters per day by 2012 and start dwindling from 2017 onwards till 2020. "Existing demand from petrochemicals, refinery and steel sectors, including for downstream units of Reliance Industries, would be taken up when there is an increase in the production from KG-D6 beyond 40 mcmd," the eGoM had said then.