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Rediff.com  » Business » FinMin seeks gas allocation details from Power Ministry

FinMin seeks gas allocation details from Power Ministry

November 04, 2013 20:55 IST

The Finance Ministry has sought from the Power Ministry details of fuel allocation to gas-based plants before giving its nod to pool prices of imported and domestically produced natural gas.

"Ministry of Finance has asked us to provide the gas allocation list of power plants and also the ones which have signed PPAs (Power Purchase Agreements)," a Power Ministry official told PTI.

The ministry has proposed to pool prices of imported and domestically produced natural gas to be supplied to power plants stranded due to drop in production of the fuel from Reliance Industries' KG-D6 block.

The ministry floated a Cabinet note last month to seek approval to pool imported liquefied natural gas (LNG) with the fuel available from the KG-D6 block after meeting the requirements of fertiliser units. The move is aimed at helping gas-starved power plants.

As per the ministry's proposal, during 2014-15, around 3,000 MW capacity power plants will get gas under the gas-pooling mechanism. The electricity produced from these plants is likely to be sold at a tariff of Rs 7 per unit.

The proposed electricity tariff was derived after pooling the prices of imported and domestic gas and deducting government subsidy, which requires approval, the official said.

The tariff may increase to Rs 7.50 per unit in 2015-16, when gas will be made available to additional power plants.

And in the financial year 2015-16, the remaining 4,800 MW capacity plants will also be able to get gas.

Currently, 7,800 MW of gas-based power generation is stuck due to scarcity of natural gas.

The proposal will be finalised once the Finance Ministry agrees to provide the subsidy. State-run GAIL India will be the facilitator for the price-pooling mechanism.

The price of KG-D6 gas was set at $4.2 per million British thermal units by the government and is proposed to be doubled from April 2014. LNG costs about $13-14 per mmBtu.

The fertiliser sector currently gets 31 million standard cubic metres a day of gas from domestic fields.

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