Government hikes gas allocation for fertiliser units, power plants

The government has raised natural gas allocation to fertiliser units and power plants to 43.2 million metric standard cubic metres (mmscmd) for the current fiscal year, up from 29 mmscmd in the previous year, chemicals and fertiliser minister Ram Vilas Paswan said.

The decision was made at a meeting of the empowered group of ministers (EGoM) which met to finalise gas allocations for 2008-09.

Fertiliser plants will get first priority, while existing gas-based power plants will get second priority, followed by city gas distribution projects, under the interim allocation formula.

This interim formula will be used for allocation of gas from Reliance Industries' KG basin fields. Reliance is expected to pump 40 million standard cubic meters per day (mmscmd) of gas from the third quarter this year.

The government is yet to finalise a gas utilisation policy.

The power ministry, however, is seeking higher allocation to run gas-based power projects to full capacity. The power sector is also last in the priority order for gas allocation for greenfield projects.