In a move that will diminish gas supplies to fuel-starved power plants, the Oil Ministry has ordered Reliance Industries to first meet full requirement of Dabhol power plant and distribute any remaining KG-D6 output among other users.
Faced with an unanticipated sharp decline in KG-D6 gas production, the government had last year ordered a pro-rata cut in supplies to 25 power plants which had an original allocation of 28.90 million standard cubic metres per day (mmscmd).
But there was no cut in the 15.668 mmscmd allocation to 16 fertiliser plants, who were given top priority in gas allocation.
Sources said Ratnagiri Gas & Power Pvt Ltd (RGPPL), the firm that now runs the 1,967 MW power plant at Dabhol in Maharashtra, was allocated 7.6 mmscmd of KG-D6 gas. It like other power plants, however, got only 40% of allocated volumes.
The Ministry in its July 31 order cited an Empowered Group of Ministers (EGoM) decision of February 24 to order RIL to supply RGPPL 7.6 mmscmd of gas in full, sources said, adding it was not clear what took the ministry over five months to communicate the decision of the ministerial panel.
KG-D6 output has fallen to about 29 mmscmd this month, of which just about 12 mmscmd was being supplied to power plants. The supplies to power plant include those to RGPPL.
After the ministry's July 31 order, RGPPL will get 7.6 mmscmd, leaving under 5 mmscmd to be divided among the 24 other power plants.
KG-D6 gas output has fallen from 61.5 mmscmd in March 2010 to under 29 mmscmd. Of the current output, over 14 mmscmd is sold to fertiliser plants and about 3 mmscmd goes to LPG extraction plants, leaving 12 mmscmd for power plants.
Sources said the EGoM in its meeting on February 24 directed supply of full quota of gas to RGPPL after Power Ministry made a request.
Power ministry argued that the beleaguered Dabhol power plant after the exit of its bankrupt owner Enron Corp of US, was granted 'top most priority' in allocation of KG-D6 gas at par with the fertiliser sector by the EGoM while making original allocation on October 23, 2008.
Following from that decision, no cut should be made in supplies to RGPPL till cuts for the fertliser sector starts, it had argued.
According to the power ministry, substantial cuts in the supply of KG-D6 gas to RGPPL has been observed from November 2011, onwards, despite the fact that no cut has been started for the fertiliser sector till date.
Sources said Andhra Pradesh has lodged a strong protest against the RGPPL allocation, claiming that this will hurt power plants in the state, as they are already operating at a lower plant load factor (PLF) of 52% as against the 75% PLF mandated by the EGoM.
