Oil ministry for no domestic gas supply to merchant power plants

As per the proposal, domestic natural gas, which is available at one-third the price of imported LNG, will only be supplied to companies that sell all power produced from this gas at regulated tariffs

New Delhi: The oil ministry is mulling a ban on the supply of scarce domestically produced natural gas to merchant power plants, reports PTI quoting a senior government official.

As per the proposal, domestic natural gas, which is available at one-third the price of imported LNG, will only be supplied to companies that sell all power produced from this gas at regulated tariffs, a ministry official said.

Merchant power plants are units that do not enter into any long-term power purchase contract for the sale of power and instead sell their output in the spot market. Tariffs in the spot market depend on the supply and demand situation and have on many occasions been several times that of regulated tariffs.

The official said a scarce natural resource cannot be used for profiteering.

“It is felt that domestically available scarce gas (which is substantially cheaper than the imported LNG) should be made available only to those power plants that are willing to sell power to the grid so that power is available to people at large at regulated rates,” he said.

Against the demand of 230 million metric standard cubic metres per day (mmscmd), India produces about 166 mmscmd, including close to 45 mmscmd from Reliance Industries’ eastern offshore KG-D6 fields.

KG-D6 gas and other domestically produced gas is priced at $4.20 per million metric British thermal units (mmBtu), while imported gas in its liquid form (called liquefied natural gas, or LNG) costs upward of $13-$14 per mmBtu.

Of the 21.87 mmscmd of KG-D6 gas that has been allocated to 27 power plants in the country, at least two of them (the Lanco Kondapalli expansion and Tanir Bavi in Andhra Pradesh) are merchant power plants that sell power during peak seasons to private entities at an average price premium of about Rs2 per unit compared to the regulated rates.

The official said a view on the 1.46 mmscmd allocated to Lanco and 0.88 mmscmd supplied to Tanir Bavi will have to be taken by the Empowered Group of Ministers (EGoM).

“In view of the scarcity of domestic gas, the current and future allocations of domestic gas will be subject to the condition that the entire electricity produced from this gas shall be sold under long-term Power Purchase Agreements to the grid/distribution companies at regulated tariffs approved by the regulator(s),” the policy under formulation reads.

The official said the Gas Utilisation Policy has prioritised allocation from KG-D6 fields to urea-manufacturing fertiliser plants, LPG extraction units, power plants and city gas distribution projects and thereafter to steel, petrochemical, refinery and captive power plants.

The policy has placed captive and merchant power/feed stock for fuel purposes at the bottom of the list of priority-based gas allocation.

The power ministry, too, is of the view that for private sector projects, a PPA for at least 85% of the allotted gas should be a precondition for drawal of domestic gas.

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Rs32 per day poverty line not all that ‘ridiculous’: Plan panel

“The fact is that Rs4,824 per month for a family (of five persons) to define poverty is not comfortable but it is not all that ridiculous from Indian conditions,” Planning Commission deputy chairman Montek Singh Ahluwalia said in a letter to attorney general Goolam Vahanvati

New Delhi: Amid raging controversy over Rs 32per capita per day poverty line, Planning Commission deputy chairman Montek Singh Ahluwalia has said ‘it is not all that ridiculous’ in Indian conditions, report PTI.

“The fact is that Rs4,824 per month for a family (of five persons) to define poverty is not comfortable but it is not all that ridiculous from Indian conditions,” Mr Ahluwalia said in a letter to attorney general Goolam Vahanvati.

Mr Vahanvati has agreed to appear in Supreme Court of India on behalf of the Planning Commission in connection with the Public Interest Litigation (PIL) filed by the Right to Food Campaign.

The Planning Commission has drawn flak from several quarters, including civil society for pegging poverty in urban areas at Rs32 per capita per day. The figure in rural area is Rs26 a day.

Referring to the criticism on poverty line, he said, “Social activists have vociferously criticised the latest poverty line of Rs3,905 for rural areas and Rs4,824 in urban areas as ‘cruel joke’ by converting the figure into per person per day i.e. Rs26 and Rs32 respectively.

“Many people are persuaded by this because they sometimes think of daily allowance as meant for family budget... It does not need to be emphasised that the poverty line is not a comfort line of acceptable living for the aam admi (common man). It is poverty line which by definition implies considerable stress.”

On states’ criticism that Planning Commission is understating poverty, leaving out deserving individuals, Mr Ahluwalia explained, “The fact ...is that states gave many more below poverty line (BPL) cards than their entitlement and what is worse is, they often did not give the cards to deserving people.”

On criticism that the poverty line is not adequate to take care of health and education, Mr Ahluwalia said that these facilities are required to be provided free by the state.

“This has always has been the assumption in calculating poverty line. The (Tendulkar) committee should have brought this out more clearly but they did not. It is absolutely that these facilities are often not provided and where they are provided, they are often not availed of, because of poor quality,” he said.

The solution to these problems, Mr Ahluwalia said, “lies in improving the provision of public service... The solution does not lie in raising the poverty line.”

A controversy was triggered after the Commission filed an affidavit in the Supreme Court which said, “a family of five spending less than Rs4,824 (at June 2011 prices) in urban areas will fall in the BPL (Below Poverty Line) category. The expenditure limit for a family in rural areas has been fixed at Rs3,905 (per month).”

Among others, the National Advisory Council (NAC) member Aruna Roy and Harsh Mander challenged the Rs32 per person poverty definition of the Commission.

Other members of the NAC, which is headed by Congress President Sonia Gandhi, too, had opposed the Commission's definition.

Ridiculing the Commission’s poverty line, NAC member NC Saxena said, “On Rs32 a day, you know only dogs and animals can live.”

He further said, “People who are spending below Rs32 (a day)... They are poorest of the poor. You can call them destitute, you can call them people living in sub-human level.”

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Maruti strike costs exchequer Rs350 crore in excise duty

It is estimated that per car on an average, the government is losing Rs68,000 in the form of excise duty, thereby, resulting in a total loss of Rs349 crore. The Haryana government is also losing out Rs6,000 per car on an average as sales tax, resulting in a total of Rs30.80 crore so far

New Delhi: A series of strikes at the country’s largest carmaker Maruti Suzuki India’s (MSI) Manesar plant since June this year has resulted in excise revenue losses to the tune of nearly Rs350 crore for the government, while the company has already suffered a hit of up to Rs1,540 crore, reports PTI.

Since the first round of strike for 13 days in June this year to the 33-day-long standoff from 29th August to 1st October and the fresh strike at the Manesar plant from 7th October, MSI has suffered a total production loss of 51,375 units.

According to the industry calculations, it is estimated that per car on an average, the government is losing Rs68,000 in the form of excise duty, thereby, resulting in a total loss of Rs349 crore.

The Haryana government, on the other hand, is also losing out Rs6,000 per car on an average as sales tax, resulting in a total of Rs30.80 crore so far.

The revenue loss to the company from the series of strikes since June is estimated at Rs1,540 crore.

When contacted, a company spokesperson confirmed the production loss due to the series of strikes but declined to comment on the financial losses.

The year 2011 has proved to be a tough one for India’s biggest carmaker. In June, the workers at the Manesar plant had gone on a 13-day-long strike demanding the recognition of a new union—Maruti Suzuki Employees Union.

After it was resolved, a standoff broke out between the workers and the management on 29th August over the issue of signing of a good conduct bond, a prerequisite made for permanent workers to enter the factory premises.

On 1st October an agreement was reached to end the standoff with MSI agreeing to conditionally take back 18 trainees who were suspended. However, it refused to take back 44 regular employees against whom disciplinary action was taken and who remain under suspension.

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