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Gas allocation: priority to fertilizer, LPG plants

NEW DELHI: The government has decided to accord top priority to fertilizer and LPG plants for allocation of gas under the new natural gas policy regime. Work would also be initiated to provide connectivity to the five naphtha and fuel oil-based plants and reopen seven closed units.

Informed sources said there are around 22 fertilizer plants that use natural gas. In addition, there are five naphtha and three fuel oil-based plants. The seven closed plants have a capacity to produce 7 million metric tonnes of urea annually.

As for the fuel oil-based plants of the National Fertilizer Limited (NFL) at Nangal, Panipat and Bhatinda, they would be provided gas through the Gas Authority of India’s Dadri-Bawana-Nangal pipeline link expected to be commissioned by 2009.

According to the new policy on utilisation of natural gas, the combined annual production capacity of the 22 gas-based plants is 16.6 million metric tonnes. Due to the shortfall in the availability of gas, these plants have no option but to use costlier alternatives such as naphtha and fuel oil.

Against the requirement of 39.4 million metric standard cubic metre per day (mmscmd), the current supply to these plants is around 30.2 mmscmd, a shortfall of around 9.2 mmscmd. “There is an urgent need to convert the naphtha and fuel oil-based plants to gas for economic as well as environmental reasons.

New pipelines are expected to connect these plants to gas by 2010-11,” a senior official said.

The gas requirement of the closed fertilizer units could be around 14 mmscmd when they are revived.

The new policy states that LPG should be given priority, it being a clean fuel used for cooking.

It acknowledges that there is a shortage of LPG for domestic use. About 25 per cent of the requirement is met by imports.

This is expected to go up in the coming years.

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