In a move to promote use of compressed natural gas, the government has ordered state gas utility GAIL India Ltd to supply natural gas to city gas retailers by cutting supplies of non-priority sectors like steel and petrochemicals.
The Petroleum Ministry in an order on Wednesday said it has revised guidelines for allocation/supply of domestic natural gas to city gas distribution entities for CNG and piped cooking gas sector.
". . .it has been decided to authorise GAIL for diverting domestic gas from non-priority sector to meet the requirement of CNG (transport) and PNG (domestic) segment as per their actual consumption," the Ministry said in an order.
The gas would be supplied at uniform base price to each CGD entity.
GAIL will undertake allocation exercise after end of every six months and supply of domestically produced gas to CGD entities based on their average consumption.
Any increased requirement of the gas would be met by cutting supplies of non-priority sectors, the order said.
The government had in February raise natural gas allocation to city gas distribution entities like Indraprastha Gas Ltd of Delhi and Mahanagar Gas Ltd of Mumbai to 8.32 million standard cubic meters per day from 6.4 mmscmd previously.
However, this allocation is not enough to meet the fast expanding city gas sector.
To meet their requirement, the government has now decided to divert supplies from non-core sectors.
"The allocation exercise will be undertaken by GAIL after end of every six months. Petroleum Planning and Analysis Cell shall within completion of 20 days of a half year submit the average consumption of gas by each CGD entity in CNG (transport) and PNG (domestic) segments to GAIL," the order said.
Full requirement of CNG and PNG to households will be met by GAIL.
"GAIL will accordingly divert domestic gas (except NELP gas) from non-priority sector by applying prorata cuts to meet the requirement of CNG (transport) and PNG (domestic) of individual CGD entities," it said.
Prorata cuts, however, would not be applied to supply of gas to small consumers.
Of the 80 mmscmd of domestically produced gas in 2013-14, 13.5 mmscmd of gas came from NELP block of KG-D6 of Reliance Industries. None of the NELP gas currently goes to non-core sectors.
Of the remaining gas, steel plants get 1.32 mmscmd and another 1.89 mmscmd to oil refineries.
Petrochemical plants were supplied 3.82 mmscmd.
These sectors will now face a cut as when CGD entities make demand for more gas.
Nearly 58 mmscmd of gas is consumed by core sectors of fertiliser and power.