Fertiliser min to oppose planned move to give priority to power sector
The oil ministry?s intent to give priority to the power sector for allocation of gas has raised an alarm in the fertiliser ministry. Sources have indicated that the fertiliser ministry will strongly oppose the move when oil ministry circulates the a note on gas allocation for approval of the empowered group of ministers? (EGoM). It is also likely to seek higher priority for the fertliser sector so that benefits of cheaper fuel reach the country?s farming community.
The fertiliser ministry wants priority in gas allocation to be restored to fertiliser units. Amid continuous decline in gas output from Reliance?s most prolific KG-D6 block, the ministry had earlier raised concerns over the oil ministry?s move to allocate natural gas for Ratnagiri Gas & Power plant on priority basis at the cost of supplies to fertiliser plants.
According to official data, gas output from KG-D6 block has dropped below 20 million standard cubic meters per day (mmscmd), out of which fertiliser sector gets about 15 mmscmd, around 2.5 mmscmd is used by liquefied petroleum gas plants and balance by power plants.
The fertiliser ministry wants to protect the fuel allocation for the sector for the benefit of farmers. In the absence of domestic gas, fertiliser companies would have to import gas at thrice the domestic price of $4.2/mmbtu and would increase the government?s subsidy bill.
Almost 20 gas-based fertiliser plants are facing difficulties due to scarcity of natural gas, with few plants being fired by the more expensive naphtha fuel.
Earlier, the government had allocated 7.6 mmscmd of gas from KG-D6 to the power plant at Dabhol in Maharashtra this year after a request from the power ministry. The 1,967-MW project, jointly owned by NTPC and GAIL, is, however, currently getting just about 2 mmscmd gas from the block.
With a pending subsidy bill of around R40,000 crore since August, the fertiliser ministry has asked the finance ministry to make an interim banking arrangement for fertiliser firms to raise money from banks. The amount is over and above the R60,974 crore of fertiliser subsidy provided in Union Budget 2012-13, which has already been exhausted for meeting payments till July.
