The five-member empowered group of ministers headed by all-purpose minster Pranab Mukherjee met today to decide on allocation of natural gas from Reliance Industries Ltd's eastern offshore KG-D6 fields in the Krishna-Godavari basin to power plants.

Distribution among fertiliser plants has already been decided.

Reports say that power plants in Andhra Pradesh and Maharashtra are likely to get preference. ''As production from KG-D6 is expected in a few weeks, it is emergent to take a decision regarding supply of gas so produced to power plants,'' a ministry letter to the Election Commission seeking its approval to hold the meeting said.

With the general election close, the government needs the Election Commission's approval for any policy decision.

Apart from Mukherjee, the GoM comprises power minister Sushilkumar Shinde, chemicals and fertilisers minister Ram Vilas Paswan, law minister HR Bhardwaj and petroleum minister Murli Deora.

Reliance owns 90 per cent of the gas-rich KG-D6 block. The company will start producing 10 million standard cubic metres per day (mscmd) and intends to ramp it up to a peak of 80 mscmd by the end of 2009. The government has outlined a utilisation policy for this gas, listing the gas recipients in order of priority as existing fertiliser, liquefied natural gas plants, petrochemical and power plants, and city cooking gas distribution projects and refineries.

The quantum to be allocated among urea manufacturers has been fixed at 15 mscmd. RIL has sent a revised gas sales and purchase agreement to the identified urea plants and is expected to sign the pacts next week.

RIL and its partner Niko are expected to begin gas production from the D6 block in a couple of weeks. The prospective buyers include Rashtriya Chemicals and Fertilisers, Nagarjuna Chemicals and Fertilisers, IFFCO, KRIBHCO, Chambal Fertilisers, Tata Chemicals, Indo-Gulf Fertilisers, and companies fed by Gas Authority of India Ltd's Hazira-Vijaipur-Jagdishpur pipeline.

The GoM has also decided on a gas price of $4.2/mBtu at landfall point for a crude price greater or equal to $60 a barrel. The price is applicable to all consumers of D6 across all sectors.

According to a report, RIL may even get to use some of its own gas. The government is likely to alter the gas utilisation policy to this, says the Economic Times, quoting an unnamed union minister.

RIL, which has the world's largest refinery complex at Jamnagar and a petrochemical plant, is expected to use the natural gas as fuel for its captive power projects, apart from other industrial uses such as heating.

Under the current gas utilisation policy, RIL can't use its own gas. Allowing RIL to use some of its gas could set the precedent for other gas producers in future as well.

''While EGoM has listed top-priority customers for the distribution of first 40 million standard cu m per day (mmscmd) gas, there is a case for allowing contractor (RIL) to use some of it in the second phase,'' the minister is reported to have said.

RIL recently abandoned a plan to put up a power plant based on its KG basin gas because it had been kept out of the list of initial customers. The company ended up cancelling orders for boilers and turbines.