New gas allocation policy to give preference to new plants: report

A gas allocation policy, which is likely to accord preference to new power plants over expansion project is reportedly on the anvil and, according to a power ministry official, the (gas linkage) policy may be broadly based on the coal linkage policy.

According to the coal linkage policy, first priority would be accorded to power projects of the central sector PSUs like NTPC, state sector utilities like APGENCO (Andhra Pradesh Generation Co) and projects to be bid out by states on tariff based competitive bidding, followed by independent power projects (IPPs) and captive power plants.

The new policy is likely be called the Gas Linkage Policy and under it the government is proposing the option of giving preference to greenfield (new) power projects over brownfield (expansion).

The official said it may be that new projects would get priority over the existing ones. He added that the modalities of the policy are being worked out.

According to analysts, if the government were to decide to allocate gas to new projects ahead of the existing ones, the move may seriously hit state-run NTPC's gas-based capacity addition plans.

Earlier, NTPC had said it would request the power ministry to present its proposal for the allotment of 30 MMSCMD (million standard cubic metres per day) of gas for its expansion projects, to the oil ministry.

NTPC, currently, has a gas-based power generation capacity of about 4,000 MW. It requires additional capacity for its expansion projects other than those at Kawas and Gandhar in Gujarat.

The company is fighting a case against Reliance Industries for gas supply to its Gujarat projects in the Bombay High Court.