Oil ministry proposes curbs on gas allocation to fertilizer units

The ministry of petroleum and natural gas has suggested restriction of future gas allocations to fertiliser units manufacturing urea and stopping gas allocation to phosphates and potassium fertiliser manufacturers.

In a note to the empowered group of ministers (EGoM), the oil ministry has suggested changes in the natural gas allocation policy in the view of the sharp decline in production at Reliance Industries-operated eastern offshore KG-D6 gas block.

The ministry also proposed stopping of gas supplies to power producers that fail to sell electricity at regulated tariff.

Under the revised allocation policy, first priority will be given to power producers followed by urea produces, city gas distribution (CGD) networks and stranded assets of power producers in that order.

The EgoM headed by finance minister Pranab Mukherjee will take a decision on the gas shortage issue, minister of petroleum and natural gas S Jaipal Reddy said today.

Reddy was interacting with newspersons on the sidelines of a function in New Delhi today.

He said the government is aware of the issue of gas shortage and would receive suggestions from the independent producers. EGoM will explore further options, he said.

The changes in natural gas allocation policy have been necessitated by a sharp decline in production of natural gas at the Reliance-operated KG-D6 block, which has fallen to below 39 million from its peak output of 60 mmscmd in March 2011.

Meanwhile, private power producers including Tata Power, Reliance Power, the Hinduja group today met oil minister to brief him on the fuel shortages.