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Power ministry to work out criteria for gas allocation

Tuesday, 11 May 2010

11 May 2010;business-standard.com:Mansi Taneja & Jyoti Mukul:New Delhi: The battle for natural gas might cool, with the power ministry deciding to put in place guidelines for allocation of gas to upcoming power plants. Around 200 applications seeking gas linkage for about 250 million standard cubic metres a day are lying with the Ministry of Petroleum and Natural Gas. With no clear policy in place, a need to streamline the process of recommending cases is felt. The policy would assume significance, especially for the Anil Ambani group’s proposed power plant at Dadri in Uttar Pradesh, that had been at the centre of a bitterly fought court battle but is yet to get a commitment on gas from the rival Reliance Industries Ltd or the government. For the Dadri project to be recommended, it would need to fulfill the criteria. The guidelines are expected to be in place this month. The Ministry of Power forwards all applications for gas linkage in a routine manner to the Ministry of Petroleum and Natural Gas. “We have already forwarded about 200 requests for new power plants to the petroleum ministry. These plants are likely to come up in the 12th Five-Year Plan and will have a capacity of 25,000-30,000 Mw,” a senior official in the power ministry told Business Standard. For coal linkage, however, there is a well laid criterion for recommending cases. The ministry is currently in discussion with Central Electricity Authority, the technical regulator for the power sector, to finalise the guidelines. For allotting coal blocks and linkages for captive use, the government gives priority to those that are executed by the state and central public sector units. Second, joint ventures between two states or state and central governments are also given priority. IPP (independent power producer) projects, which have, rate approval by the appropriate tariff commission and projects being developed on the basis of competitive bidding for tariff (include ultra mega power projects) fall next in the line. Prioritisation of projects requiring coal is done through a system wherein 20 points each are given for use of supercritical technology and for projects located at the pit-head or in a state where no major power projects have been planned in the 11th and 12th Plan. Another 10 points are given for the use of sea water. A project gets 50 points if the entire land for it has been acquired. It gets 40 if 75 to 100 per cent land has been acquired, while 30 points are given if 50 to 75 per cent of land has been acquired. In the case of a project acquiring 25 to 50 per cent land, it gets only 20 points.