Gas allocation policy rejigged, CNG selling firms get priority

Gas allocation policy rejigged, CNG selling firms get priority

The government has restructured the gas allocation policy giving top priority to firms selling CNG and piped cooking gas for allocating scarce domestic resource, pushing down power sector to the fourth spot ignoring its demand to be given top-most priority.

At present, fertiliser units get first right over domestically produced gas while power and liquefied petroleum gas (LPG) plants immediately follow in the priority order.

City gas distribution (CGD) projects selling CNG to automobiles and piped cooking gas to households are ranked fourth currently.

Sources said this order is now being changed and petroleum ministry has approved CGD and cooking gas to be first in the queue to receive domestic gas. The ministry would soon move a cabinet note on the subject.

The second in the order of preference, under the new policy, would be plants providing inputs to strategic sectors of atomic energy and space research. After this, small quantity of gas would be allocated for extraction of higher hydrocarbons like PG and petrochemicals.

Next in the list would be gas-based urea plants, followed by power plants complying the condition that the entire electricity produced from allocated gas shall only be sold at regulated tariff, sources said.

The changes in the allocation order would be a big setback for the power sector that was expecting topmost priority in domestic gas allocation in view of severe shortages being faced by close to 20,000 mw of existing gas based power plants and another 10,000 mw that are commissioned or are in advanced stage of commissioning but without a fuel source.


Due to a fall in production from Reliance Industries’ KG D 6 block, gas allocation to several power plants has been hit severely with most plants functioning at a low plant load factor of around 25 per cent.

To boost domestic manufacturing, micro and small enterprises that use gas for heating or captive power generation, would be placed after the power sector as a recipient of domestically produced gas.

The new policy has also proposed to bring clarity in the definition of priority and non-priority sectors. The priority 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.

The change in allocation policy is coming at a time when domestic gas production is severely short and most consumers are not getting the promised quota of fuel. The government hopes that gas situation may improve in coming months with production from some of the ONGC blocks while improvement in gas out from KG D6.

In 2013-14, 76.7 mmscmd of gas was supplied from domestic sources as against allocation made for about 243 mmscmd. Of this, fertiliser plants received 29.79 mmscmd of gas. Power plants got 25.59 mmscmd while LPG extraction plants received 1.83 mmscmd. Petrochemical plants received 3.32 mmscmd while refineries got 1.89 mmscmd and steel plants 1.32 mmscmd.

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