Government has no role in fixing prices of natural gas produced from areas auctioned under NELP and only approves the pricing formula, petroleum ministry has told a committee of Secretaries appointed to look into the vexed issue. Petroleum Secretary M S Srinivasan on Monday made a detailed presentation to the CoS on the gas supply scenario and how demand in fertiliser sector was to be met. The CoS, which began consultation on Friday, continued its discussion on Monday and decided to solicit views of fertiliser and power ministries on July 5, official sources said.
The Prime Minister's Office had on May 23 conveyed that the fertiliser sector should get priority in natural gas allocation and power sector should be encouraged to rely more on coal for new capacities. Accordingly, Petroleum Ministry informed that domestic gas production will increase from 80.54 million standard cubic meters per day in 2007-08 to 119.98 mmscmd in 2008-09.
As much as 74 mmscmd of additional supplies would be added in 2009-10, 84 mmscmd in 2010-11 and 94 mmscmd in 2011-12 as Reliance Industries [Get Quote], GSPC and ONGC [Get Quote] begin production from KG fields.
These would be more than the 47.65 mmscmd demand for fertiliser sector - 7.73 mmscmd unmet demand of current units, 6.35 mmsmcd for conversion of naphtha based units to gas, 3.96 mmscmd for conversion of fuel oil units to gas, 17.66 for expansion and 11.95 mmscmd for opening closed units.
Sources said conversion of naphtha and fuel oil units to gas would help the exchequer save Rs 6,400 crore (Rs 64 billion) in fertiliser subsidy.
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