Power projects may soon get gas from KG basin

The government is likely to soon allow new power projects to get gas from the Reliance Industries’ (RIL) KG basin as the empowered group of ministers (EGoM) on gas policy gets ready to pick next set of customers for the RIL gas. Unlike last time, when gas was decided to be allocated only to projects that were already operational but were facing shortage of gas, this time the EGoM is likely to focus on greenfield projects.

The EGoM however will only decide on the amount of gas that would be given to power projects while actual beneficiaries will be decided by the power ministry. The government had in its gas utilisation policy given the power sector second highest priority after the fertiliser industry in context of eligibility to get gas from the RIL’s KG basin.

However, around 200 applications seeking gas linkage for about 250 million standard cubic metres a day have piled up with the ministry of petroleum. The power ministry has been forwarding all applications for gas linkage in a routine manner to the petroleum ministry. But, with no clear policy in place, the petroleum ministry has not been able to choose beneficiaries.

Therefore, the decision regarding who will get the gas will now be based on new gas linkage policy under preparation by the power ministry. The gas linkage policy will be similar to the coal linkage policy approved last year by the government and will be based on a points system, with a maximum of 100. Various parameters like locations, status of land acquisition and water linkage etc will fetch points to the power projects and depending on the final score a list of beneficiaries will be prepared.

A number of power projects will benefit from the new policy which is likely to be in place within a month. NTPC, the government owned largest power generator in the country, will be one of the key beneficiary as it has lined up 7,500 mw of expansion projects. The ADAG group will be another beneficiary for its proposed gas-based power plant at Dadri. However, allocations to Dadri project will also depend on how the two Ambani brothers settle their gas sale negotiations.