Power gets short shrift in new gas policy

  • 03/04/2008

  • Economic Times (New Delhi)

ALL new private power projects, which are at the drawing board stage, may have to kiss goodbye to their plans of developing power plants based on clean fuel like natural gas. The gas utilisation policy, which will soon receive its official stamp of approval, proposes to give the highest priority to fertiliser plants, followed by petrochemical and LPG fractioner units. Policymakers have argued that the gas utilisation policy, on which the fuel would be distributed by the private operators like RIL, Cairn, British Gas among others, is drawing from the Integrtaed Energy Policy. According to the policy document, India would need to draw on its coal reserves for developing its future power capacity. However, the new gas utilisation policy is unlikely to go down well with the power developers. A senior official in the power ministry raised objection to this allocation. "A high GDP growth rate is impossible without ensuring power supply. Fertiliser can be imported, not power,' he said. Notwithstanding power ministry's objection, fertiliser sector is all set to get top position when it comes to allocation of the domestically-produced natural gas. The government is ready with the final draft of the national gas utilisation policy about three months before the official date for gas production from the RIL's KG basin. The policy is expected to be placed before the Empowered Group of Ministers (EGoM) on Friday. The final draft utilisation policy has endorsed the first claim of fertiliser sector on the natural resource. Petrochemical and LPG fractioner units are the number two contenders. "The units may be given the next preference so as to ensure them running at full load. This would also ensure that all the fractions would be utilised from natural gas rich fractions and gas as a multiproduct is recognised,' an official source said. The existing gas-based power projects is the third priority of the government when it comes to allocation of domestically-produced natural gas. It is also proposed that the existing gas-based units of public sector power plants would have the first right of refusal. Claims of private-sector independent power producers are prioritised next to "ensure effective utilisation of public money,' a source close to the development said. Supply of the fuel to the city gas projects are stated to be the fourth priority. The logic; "these projects also can sustain higher gas prices because of superior margins.'While other industries like steel, cement, chemicals and automobiles get the next priority, the new gas-based power plants are at the bottom of the priority list. Even among industrial sectors, it is proposed to give preference to small-scale industries.' Petroleum sector regulator L Mansingh had also slammed the government for prescribing priority for allocation of domestically-produced natural gas.