Despite serious objections being raised by the Fertiliser Ministry on Petroleum Ministry seeking priority allocation of gas for re-igniting stalled power plants which run on the natural resource, a related move by the Jyotiraditya Scindia-led ministry to introduce pooling of gas prices - which would make the resource costly for existing fertiliser plants while making it cheaper for comparatively newer units - is set to create serious rumblings within the Government.
Also the additional cost of gas for existing fertiliser and power plants would mean that they would pass on this higher cost to the customer, which would mean higher power tariff for the common man.
According to official sources, the Power Ministry is currently finalising a cabinet note for seeking urgent allocation of 6 mmscmd gas for itself from the Petroleum Ministry for reviving several gas-based power plants. As reported by The Pioneer last month, Scindia had sought the said amount of gas by writing to this counterpart in the Petroleum Ministry M Veerappa Moily, seeking the allocation from non-core sectors.
The second part of the note suggests that prices of domestic natural gas and imported lNG should be pooled to create an average price - which would benefit the relatively new gas-based plants - while the existing plants would have to pay extra for sourcing gas.
The note would be sent to the newly created Cabinet Committee on Investment (CCI) once it receives comments from all the concerned stakeholders, sources said.
This note is parallel to the one being prepared by the Petroleum Ministry to be sent to the empowered Group of Ministers (eGoM), seeking abolition of priority allocation of gas to the fertiliser sector and lPG users, so that it can be given first to gas starved power plants.
Though the situation is likely to lead towards a face-off between the Fertiliser, Power and Petroleum Ministries in the near future, the Shram Shakti Bhavan officialdom is still going ahead with seeking comments from stakeholders on the cabinet note as it is under pressure from the PMO to do so.
After their gas-based power plants got stalled owing to depleting output from KG-D6 gas fields, head honchos of Reliance Power, lanco, GMR and GVK had met Moily in March this year, urging him to intervene and provide gas for their dying plants. Subsequently the PMO asked the Power Ministry to prepare a note seeking comments on allocation of 6 mmscmd gas for the power sector as well as on pooling of gas prices.
The Fertiliser Ministry has already sent its adverse comments on the Petroleum Ministry's note for the eGoM seeking abolition of priority allocation of gas to the fertiliser sector, and may not be enthused with the Power Ministry's note either, sources said.
In fact even a section within the Planning Commission seems to have raised its eyebrows on the gas price pooling mechanism, simply on the logic that when there is hardly any gas available for the gas-based power plants then how can an average price derived by pooling costs of domestic gas and imported lNG help them in reviving their units.
Another aspect towards which industry watchers pointed out is that at the cost of reviving stalled plants of big entities, why should the reciprocal effect be borne by the common man in terms of higher power tariffs.
Though on the face of it, the scenario seems quite like a case of Hobson's choice for the Government, going by the PMO's urgency towards expediting gas availability to plants owned by the likes of Reliance Power, GMR, GVK and lanco, it looks clear which side the Government is, despite the ramifications and rumblings within its fold.