Divert power plants' gas to CGD projects: Petroleum and Natural Gas Regulatory Board

2011-5-31

I ndia's petroleum regulator has found a novel way to supply scarce natural gas to millions of households and automobiles and has proposed that a part of the gas allocated for power plants should be used for city gas distribution (CGD) projects, for which investments of 90,000 crore are in the pipeline.

The government's gas allocation policy accords top priority to power stations and fertiliser units in allocating natural gas, leaving little gas available for other sectors particularly at a time when output from India's biggest gas field, operated by Reliance in the Krishna-Godavari Basin, has declined unexpectedly.

But L Manshing , chairman of the Petroleum and Natural Gas Regulatory Board (PNGRB), says CGD networks can deliver gas for localised power generation, building a strong case for giving such networks top priority in gas allocation. Power industry officials say the use of localised gas-fired units is an effective way to tackle electricity shortages in peak hours because such units can easily by switched onwhen demand soars.

It is possible and desirable that the requirement of gas for CGD entities can be accommodated without any significant dilution of the priorities accorded to fertiliser and power sectors," Mansingh told ET.

The proposal would be a setback for the power sector as the government is also planning to cut back coal supply to new power stations which plan to sell electricity in the open market, which is usually much more profitable than sales to the grid under power purchase agreements. The petroleum ministry is also planning to apply the same principle in gas sales and supply gas at regulated rates only to power stations that do not sell electricity in the lucrative open market.

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