Power Cos can Divert Gas to Other Plants

The government has decided to allow power companies to divert natural gas from one of their plants to another to achieve optimal operations, relaxing the stringent policy that restricts fuel supply to specific units. The oil ministry has accepted the plea of power firms, which complained that their plant load factor (PLF) had dropped below the economic level of power generation because of acute gas shortage, government officials said.

“If domestic natural gas is allocated to different plants of a power company, the company will now be allowed to club the entire allocated gas and use it in one or more plants to improve PLF,” one official said requesting anonymity. Gas supply can be shuffled only between those plants that had originally been allocated gas, not to a new plant built by the company, officials said. Also, the company would also have to take approval of the distribution company, they said.

Officials said this arrangement would be availed among plants of a common owner and the power ministry would ensure compliance. “The company would have to convince the power ministry that the diversion of gas would improve PLF with corresponding increase in total generation of electricity vis-à-vis preclubbing period,” said the official quoted earlier.

The oil ministry has decided to relax allocations guidelines after domestic gas output fell sharply because of steep decline in natural gas production from Reliance Industries’ KG-D6 block. Reliance supplies its gas to government-specified industrial units at a regulated rate of $4.20 per unit, which is much lower than the price of imported gas. The government has a policy for allocation of cheaper gas to priority sectors. Any drop in output affects pro-rata cut on fuel supply based on priority.

According to the oil ministry, the average gas sales from D6 block in December first week was 22.77 million metric standard cubic meters per day (mmscmd) against the planned production of 86.73 mmscmd approved by the government. Out of the current production, 14.84 mmscmd has been sold to fertilizer plants and 5.03 mmscmd to power plants. Remaining 2.9 mmscmd is supplied to other priority sectors such as LPG, oil ministry officials said. The oil ministry says Reliance’s output fell sharply because the company did not drill more wells in the block. But, RIL said that the decline in output was due to geological complexities.

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