Govt yet to decide on payment of gas bill

The uncertainty over continued gas supply to six power plants of the National Thermal Power Corporation has ended.

But the ministries of power and petroleum has not yet decided who will bear the burden of higher prices of gas supplied from the Panna-Mukta-Tapti fields.

Gail (India) Ltd had hiked gas prices by $0.75 per million British thermal (MMBT) units with effect from April. But the power ministry, which has administrative control over NTPC, had opposed this move in a bid to control the state-owned company's fuel costs. In retaliation, Gail had threatened to reduce gas supplies to NTPC's gas-based power plants.

During a day-long consultation over the issue of gas supply and pricing today, the two ministries decided that NTPC's gas requirements would be fully met.

"We have today asked Gail to continue with gas supplies to NTPC," said Petroleum Secretary SC Tripathi.

When contacted, Power Secretary RV Shahi said, "We have asked the petroleum ministry to restore the earlier level of gas supply to 10 million standard cubic meter per day (mmscmd) as under the administered price mechanism (Rs 2,850 per thousand standard cubic metre). Extra gas can be given under the PMT deal."

The initial amount of gas would, however, have to be supplied at the APM price, he added.

On April 20, the petroleum ministry had said, for 6 mmscmd of gas to be supplied to the power and fertiliser sector consumers by Gail from April 1, the selling price would be about $ 2.35 per MMBTU, against the earlier price of $ 1.6 per MMBTU.

The consortium operating the Panna-Mukta-Tapti gas field had earlier threatened to withdraw supplies to Gail if it did not revise the prices.

Under a compromise formula, it was decided that Gail would buy 6 MMSCMD at $ 3.86 per MMBTU and the balance, about 5 MMSCMD, would be sold by the consortium at a price not lower than $ 3.86 per MMBTU.

The power ministry wants Oil and Natural Gas Corporation to subsidise the higher price "" a move that the petroleum ministry is resisting. "Why should ONGC subsidise NTPC," asked Tripathi.

The loss to ONGC on account of supplying subsidised gas is estimated to be Rs 3,000 crore per year. The gas pricing issue is currently being examined by a group of ministers.

The power ministry has also written to the petroleum ministry indicating that the declining net production of the ONGC is part of the problem.

"Net production has been declining. Last year, power plants lost 18 billion units of generation on this account. Supply of gas was only 60 per cent of the requirement and thus plants, which could have operated at a plant load factor of 90 per cent, operated at a lower PLF," said a power ministry official.

NTPC plants suffering on account of low gas availability include those in Auraiya, Dadri, Anta, Faridabad, Kawas and Gandhar.