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The Petroleum Minister M. Veerappa Moily said on Wednesday that he would approach an Empowered Group of Ministers (EGoM) to derive a roadmap for gas pooling mechanism for power sector.
The Petroleum Ministry is considering the step after a delegation of Anil Ambani, Chairman, Reliance; G.M. Rao, Chairman, GMR; and Madhusudan Rao, Chairman, Lanco, presented to the Minister that if such a mechanism is not put in place nearly 24,000 MW would turn into non-performing assets (NPAs).
“They (head of power companies) have suggested solutions to overcome gas shortage to power projects spread all over the country. Around 24,000 MW of power have been denied (natural gas) and they are partially or fully non-operational,” Moily told mediapersons after the meeting in New Delhi.
Explaining the scenario, the Petroleum Minister said a lot of other Ministries are also involved such as Power, Fertilizer and Agriculture. There are many decisions taken on priority. “In fact, our Ministry follows the decision of the eGoM. So, the right course of action is to convene the meeting of eGoM, place these matters before them. And seek for revision of the priority sectors,” he said.
Four key issues
The promoters of these power companies suggested four key proposals to give a lease of life to nearly 24,000 MW of gas-fired capacities.
These include formation of a common gas price pool for core sectors (power and fertiliser); augumenting the domestic supply by diverting 6 MMSCMD gas being supplied to non-core sector and reserving the 10 MMSCMD of new finds for the power sector. In addition, the companies demand supplementing the shortfall by LNG and adopting the principle of price pooling and appointment of GAIL as pool administrator and operator.
We cannot create gas
Moily said that scarcity (of natural gas) is a real problem and he cannot create gas. “Whatever is available I can distribute or I can tell the projections for the coming years what can be the availability. So, I will now take steps to convene the EGoM after circulating the Cabinet papers to the respective Ministries,” he said.
The power companies have already demanded a similar mechanism for sourcing coal. After the in-principle nod from the Cabinet Committee on Economic Affairs (CCEA), the Coal and Power Ministries are working out modalities to implement coal-pool pricing.
Ashok Khurana, Director-General of lobby group Association of Power Producers (AAP), said that if the Government does not implement such a mechanism, then nearly 24,000 MW of gas-based generation capacities will become non-performing assets (NPAs).
“If you take the present base (of domestic gas availability), this is viable. Today, approximately Rs 1,00,000 crore is stuck,” Khurana said after meeting Moily on Wednesday.
Khurana added, “We suggested to the Minister that the only possibility is that if you have a combined pool of gas with power and fertilizer sectors. That would increase the domestic base and let import, so that power would become affordable. The impact on the fertiliser sector is not much. Today, if you see the fertiliser sector is importing 50 per cent. In the new formulation, they import about 70 per cent.
Our concept is that since both power and fertiliser are priority sectors, there should not be any differentiation between the two.”
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