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Gas allocation to be rejigged; CGD projs to get 1st priorty

In a major rejig of natural gas allocation policy, the government will give firms selling CNG and piped cooking gas top-most priority for allocating the scarce domestic resource.

Presently, urea manufacturing fertiliser plants have the first right over the domestically produced gas, followed by liquefied petroleum gas (LPG) plants and power stations.

City gas distribution (CGD) projects selling CNG to automobiles and piped cooking gas to households are ranked fourth currently.

The Oil Ministry is moving Cabinet to alter this by giving CGD firms top priority, followed by plants providing inputs to strategic sectors of atomic energy and space research, sources privy to the development said.

After this, a small quantity of up to 1.5 million standard cubic meters per day of gas will be allocated for extraction of higher hydrocarbons like PG and petrochemicals.

Fourth on the list would be gas-based urea plants, followed by power plants complying the condition that the entire electricity produced from allocated gas shall only be sold at regulated tariff, they said.

To boost domestic manufacturing, micro and small enterprises that use gas for heating or captive power generation would be placed after them for receipt of domestically produced gas.

Sources said compressed natural gas (CNG) and piped natural gas (PNG) are clean fuels and will help replace subsidised diesel in automobiles and LPG in households, respectively.

According to the new allocation policy, additional requirement for CGD will be first met by imposing proportionate cuts in the domestic gas, presently being supplied to sectors other than priority sectors as decided by the Oil Ministry.

Since domestic gas production is now stagnant, it is being proposed to freeze allocation to all sectors expect CGD and LPG sector, at supply levels of 2013-14.

In 2013-14, 76.7 mmscmd of gas was supplied from domestic sources as against allocation made for about 243 mmscmd. Of this, fertilizer plants received 29.79 mmscmd of gas. Power plants got 25.59 mmscmd while LPG extraction plants received 1.83 mmscmd. Petrochemical plants received 3.32 mmscmd while refineries got 1.89 mmscmd and steel plants 1.32 mmscmd.

Also, the Ministry has proposed to make definition of priority and non-priority sector clear. Priority sector will be a group of five sectors – CGD, plants providing inputs to strategic sectors, gas-based urea plants, power stations and gas-based lPG plants.

Sectors excluding these will be considered as non-priority sectors.

The new policy, the Ministry feels, will bring uniformity in gas allocation policy by removing ambiguities and anomalies in different types of gas, sources added.

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