Andhra Pradesh government has requested the petroleum ministry to consider improved gas allocation to the power projects in the State. In a letter to the ministry, the State government mentioned that the petroleum ministry did not consider several issues while finalizing the priorities of gas allocation. This includes that currently LNG re-gas facility is available only on the western coast that is readily accessible by the gas consumers located in the western and northern part of the country whereas no such facility is available on the east coast. Thus, the power projects on the east coast area are solely dependent on the domestic gas supplies.

Further, the IPPs in Andhra Pradesh face several issues related to tax and transportation of gas that results in excessively high landed price of RLNG. Therefore, it would have been prudent to allocate RLNG to the projects in west and northern India and divert the domestic gas production from the east coast to the projects in Andhra Pradesh, the State asserted.

It also mentioned that the well head projects should be given priority, whereas gas is being supplied to projects located 1500 km away from source completely neglecting the wellhead projects. The state government also stated that fertilizers can be imported to meet the demand in the country, whereas, there is no infrastructure to import power and hence, giving priority to fertilizer sector over power sector in the present day context is irrational and unjustified.

The State informed in the letter that 3356 mw of gas-based capacity is operational in the State while 3936 MW of capacity is ready for commissioning but stranded due to non-availability of gas. These projects have been set up with a huge capital outlay of Rs. 30,000 crore and are lying idle for want of fuel. This has not only posed a huge financial risk to the developers but also to the lenders mostly public sector banks.

The State government stated that the EGoM needs to consider the reality of the transmission corridor in the country which results in restricted flow of power from other regions to southern region. Thus, it leaves the southern region with no other option than to generate its entire power requirement within the region.

In view of this, the State government asked the ministry to consider the extant scenario of grim supply shortage to gas based power projects and accord top priority to power projects ahead of fertilizer projects and more specifically to projects in southern region that are solely dependent on natural gas from KG basin.

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