Allocation policy allows 8% for SEZs, Delhi-Mumbai corridor.
The government has finalised a gas allocation policy for the power sector under which 42 per cent of the domestic gas would be reserved for companies controlled by the Centre and the states. Besides, power plants located in special economic zones and the Delhi-Mumbai industrial corridor would get 4 per cent each. The remaining 50 per cent gas would be given to the private sector, out of which 40 per cent would be for independent power producers.
No power plant will be assured gas for its entire capacity. The policy lays down that domestic gas linkage would be provided for 60 per cent of the plant’s capacity. The plant would need to be located near a gas pipeline.
As of now, there is no distinction between public and private power companies for gas allocation.
Senior government officials told Business Standard that initial allocation would be done on an in-principle basis, though the actual drawal of gas would happen only after the developer ties up at least 85 per cent of the capacity, corresponding to 60 per cent of domestic gas allocated.
For this, the power company would need to sign purchase agreements covering at least five years, since gas sales-purchase agreements were being signed for the same period.
The Ministry of Power has asked the Central Electricity Authority (CEA), the technical regulator for the sector, to prepare a list of power plants that are expected to come up during the 12th Five-year Plan period (2012-17) based on the new policy. With the ministry deciding to implement this policy coming in the 12th Plan, it is not clear what criterion would be adopted for additional gas allocation made during the current Plan period.
The gas-based capacity in the country as on June 30 was 17,220.85 Mw about 10.6 per cent of the total installed capacity of 162,366.8 Mw. “In view of the uncertainty about the availability of the gas for any new capacity, it is difficult to plan any new capacity. However, CEA has indicated that the gas-based capacity of about 25,000 Mw should be planned for implementation during the next few years,” said a senior official.
To eliminate subjectivity in the allocation policy and ensure that gas was not reserved for power plants that were only on paper, the policy lays down a weight system under which a maximum of 30 points have been allotted for progress on land acquisition. A 20-point preference would be given to projects in state which do not have coal resources and are facing power shortage.
Another 20 points would be added if the project is located in coastal areas and uses sea water instead of fresh water. Projects with environmental clearance would get a 10-point weight.
The 30 points for land would be given if at least 76 per cent of the land has been acquired. Twenty points would be given if 51 to 75 per cent land has been acquired and 10 points would be given in case 25 to 50 per cent land has been acquired.
