EGoM may not allocate gas to new customers

New Delhi: The much talked about meeting of a ministerial panel on natural gas next week is likely to deliberate on availability of gas in the country over next few years but may not allocate any fuel to any new customers, reports PTI.

The Empowered Group of Ministers (EGoM), headed by finance minister Pranab Mukherjee on 27th July, is likely to discuss setting priority for usage of the gas that is likely to be available in next five years, two sources privy to the development said.

It may ask for requirements in power and fertiliser plants coming up in future to be put up to it for a possible allocation from the projected additional gas output at a later date.

"Currently, no power plant connected with pipeline network, is starved of gas. Those commissioning this year have already been allocated gas," one of them said.

The oil ministry will make a presentation on source-wise and year-wise availability of gas and will also present a synopsis of the recent Supreme Court verdict on the Ambani gas dispute.

It may mention about Reliance Industries' (RIL) eastern offshore KG-D6 field touching peak output of 80 million standard cubic meters a day (mmscmd) in 2011-12 as well as beginning of production from Gujarat State Petroleum Corporation's KG basin fields in 2012.

Over 15 mmscmd of gas from the KG-D6 fields is available for allocation on firm basis as the government has already fixed users for over 64 mmscmd. GSPC's field will produce 8-9 mmscmd while state-run Oil and Natural Gas Corporation's Bay of Bengal fields would produce 25-30 mmscmd from 2016.

Sources said power ministry may put up the schedule of commissioning of new gas-fired power plants and their fuel requirement.

The EGoM would deliberate on how much gas and from what source can be allocated to plants commissioning sequentially, they said adding the issue of fuel for projects that haven't yet started construction may also come up for discussion.

Anil Dhirubhai Ambani Group (ADAG) firm Reliance Power (R-Power) has sought 28 million standard cubic meters per day of gas for its proposed plants at Shahapur in Maharashtra and Bharuch in Gujarat and expansion of its Samalkot plant in Andhra Pradesh.

It was not clear if the EGoM can consider giving gas to the ADAG plants as such a move may open a Pandora's Box with several power plants at conception stage, too, would seek treatment at par with R-Power and allocation of gas.

Also, the EGoM has to consider the requirement of fertiliser plants that are switching from liquid fuel to gas as feedstock, sources said.

As per the Government's Gas Utilisation Policy, whose validity has been upheld by the Supreme Court, natural gas can be allocated only to an end user who can consume gas immediately.

Sources said the EGoM will have to decide if exceptions to the present policy can be made so that proposed power plants like those of R-Power can get fuel from KG-D6 fields by reserving or blocking certain volumes for it.

At present, the Gas Utilisation Policy does not provide for reservation or blocking of natural gas for future plants and all of the output from KG-D6 fields has been allocated to units that said could consume the fuel immediately.

Since the KG-D6 fields have finite resources, output will have to be capped and volumes above that reserved for production when plants like those R-Power are built.

Alternately, the government will have to cut supplies to existing customers to accommodate future plants.

RIL has till date signed up for 57.8 mmscmd of its output on long term contract. It has told the oil ministry that it can sign up for another 2.2 mmscmd on long term since output from KG-D6 can be sustained only at 60 mmscmd.

The apex court had in May rejected ADAG firm Reliance Natural Resources (RNRL) plea to get gas from RIL at concessional rates of $2.34 per million British thermal units (mmBtu) for 17 years under a family agreement, saying government alone has the right to approve the price and fix its users.

An oil ministry official had earlier stated that ADAG plants may be considered for allocation of gas six months prior to the commissioning.

"Anyone wanting natural gas for their plants, be it in fertiliser, power or any other sector, the allocation is to be made (to them) closer to the time when they can actually consume that gas," he had said.

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India to be 3rd largest FDI recipient in 2010-12: UNCTAD

New Delhi: The United Nations Conference on Trade and Development (UNCTAD) on Thursday said the country will emerge as the third largest recipient of foreign direct investment (FDI) for the three-year period ending 2012, reports PTI.

"If the situation continues to improve, India is likely to be among the most promising investor-home countries in 2010-12 as well as the third highest economy for FDI in 2010-12," UNCTAD said in its World Investment Report 2010.

India remained in the list of top 10 countries in 2009 to have the highest FDI in the world. In 2009, the country received FDI worth $34.6 billion, while the outward FDI was $14.9 billion, the report, released on Thursday said.

UNCTAD said the global FDI flows began to bottom out in the later half of 2009 and has shown a modest recovery in the first half of 2010 with South Asia being the first to bounce back from the recent downturn.

"FDI flows worldwide are expected to recover slightly this year...FDI flows to South Asia have experienced their largest decline since 2001, but they were the first to bottom out from the current downturn," the report said.

Increasing intra-regional FDI has become an effective vehicle for industrial upgrading in the South Asia region, providing opportunities to countries at different stages of development, UNCTAD said and noted that "inflows from developed countries contracted the most, while intraregional FDI gained ground."

Further, it said the outward flow of FDI from the region, which had declined, is likely to recover riding on cross-border mergers and acquisitions (M&As). "FDI outflows are expected to rebound in 2010, sustained by M&A opportunities associated with Indian and Chinese firms' persistent pursuit of natural resources and markets," it said.

Besides, UNCTAD also said recent forecasts suggest that the global economy has exited recession and returned to growth. "The world economy is expected to grow by 3% in 2010," it said.

It also forecasts that central banks are expected to maintain low interest rates till the end of 2010 and commodity price increases are likely to remain modest.

The report also focuses on climate change and in particular the role of transnational corporations in supporting the transition of developing countries to a low-carbon economy. Low-carbon FDI is significant and its potential huge, said UNCTAD. In three key low-carbon business areas alone, FDI flows are estimated to have been $90 billion in 2009.

"A quarter of the greenfield investments in alternative or renewable power generation were in the developing economies including India and Pakistan," the report said.

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COMMENTS

Shadi Katyal

6 years ago

One wonders how it makes the nation happy while others like UNCTAD shed some light of future FDI for India.
So far the nation has failed to utilize this and India is not considered as healthy for investment as say China or even Singapore.;
Has the GOI and Reserve Bank along with Ministry of finance yet figured out why?
Let us taje everything with ground realities and not get carried away. India development is stunted due to such restrictions on investment. We might read 8.5 growth but let us breadk it soen and see how much industrial production and balance of what
Sorry to be trouble maker but facts speak for itself

Fed up

Last year, the Federal Reserve propped up around $1 trillion in home mortgages-now it has got a heap of IOUs that it doesn't want... and cannot sell.

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