Antony heads panel to review gas allocation policy

A panel of ministers set up to decide on the commercial utilisation of natural gas produced in the country will meet tomorrow to review priorities in the allocation of gas to consuming sectors.

The empowered group of ministers headed by defence minister A K Antony has been asked to consider ways of prioritising core sector industries such as fertiliser, LPG, power and city gas distribution.

With the gas production from Reliance Industries-operated KG-D6 gas blocks in the east coast, the main source of domestic gas supply, steadily declining and no other gas find getting ready for commercial exploitation, the panel is likely to do away with the current sectoral priorities, which is heavily loaded in favour of fertiliser industries.

The oil ministry has proposed doing away with all sectoral priorities in gas allocation, which, however, is facing opposition from the fertiliser ministry

The panel will also decide on re-distributing the available gas among the three core sector consumers on the basis of the gas supply agreements.

It could also consider maintaining status quo or according equal priority to the fertiliser and power sectors.

The current production at the KG-D6 block is less than 15 mmscmd, which is not even sufficient to meet the needs of the fertiliser industry.

The fertiliser industry is dependent on domestic gas supplies for producing 14 million tonnes out of the total domestic production of urea of 22 million tonnes, with the balance manufactured from imported LNG and naphtha.

For the power plants that are facing acute shortage of cheap fuel after a sharp decline in gas output from the KG-D6 block, a change in allocation policy would help generate power at stranded projects.

This could help generate about 2,200 MW from existing and stranded plants, sources pointed out.

The power ministry, meanwhile, has written to power developers not to plan any gas-based power plants till 2015-16 due to paucity of gas.

For the LPG consumers, mostly households, there is no lobby to help secure gas allocation, except the political class.