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The petroleum ministry has proposed reworking the allocation policy of natural gas from non-New Exploration Licensing Policy (Nelp) blocks, to give first priority to firms selling compressed natural gas (CNG) and piped natural gas (PNG) for allocating the limited resource.
At present, fertiliser plants manufacturing urea enjoy the first priority over domestically produced gas followed by liquefied petroleum gas (LPG) plants and power stations.
City Gas Distribution (CGD) projects selling CNG to automobiles and PNG to households are ranked fourth.
The ministry is understood to have floated a note for the Cabinet Committee on Economic Affairs (CCEA) to give CGD firms top priority, followed by plants providing inputs to the strategic sectors of atomic energy and space research.
This will be followed by a small quantity of gas, up to 1.5 million standard cubic meters per day (mscmd), that will be allocated for extraction of higher hydrocarbons, including petrochemicals.
Gas-based urea plants would be fourth on the list, followed by power plants, provided they meet the condition that the entire electricity produced from allocated gas will only be sold at regulated rates.
The idea behind the review of the allocation priority for non-Nelp gas is that CNG and PNG are clean fuels which will help replace subsidised diesel in automobiles and LPG in households.
The new policy will also bring uniformity in allocation policy and eliminate anomalies on different sources of gas.
The ministry has also proposed to freeze allocation to all sectors, expect CGD and LPG, at supply levels of 2013-14 because domestic production is stagnant.
In 2013-14, 76.7 mscmd of gas was supplied from domestic sources as against allocation made for about 243 mmscmd. Of this, fertiliser plants received 29.79 mscmd of gas. Power plants got 25.59 mscmd, while LPG extraction plants received 1.83 mmscmd. Petrochemical plants received 3.32 mscmd while refineries got 1.89 mscmd and steel plants 1.32 mmscmd.
The ministry has also proposed to clearly define priority and non-priority sectors. The former will be a group of five sectors — CGD, plants providing inputs to strategic sectors, gas-based urea plants, power stations and gas-based LPG plants.
