New Delhi: Months after effecting drastic cut in natural gas supplies to small industries in Gujarat, Oil Ministry has admitted that small consumers were bracketed with priority sector users like fertiliser and power by the Cabinet but were deprioritised at departmental level.
State-owned GAIL had in October slashed gas supplies to small industries in Gujarat by up to 58 percent to meet fuel requirement of CNG (compressed natural gas) and PNG (piped natural gas) supplies in cities. It, however, did not touch small users in other states.
On an explanation sought by the Prime Minister's Office (PMO), the Ministry last month wrote saying the cuts had been imposed on non-priority sectors to meet the requirement of city gas distribution entities.
The ministry told the PMO that the Cabinet decision of June 20, 2005 had considered four sectors - power, fertiliser, court-mandated customers and small scale consumers having allocation up to 0.05 million standard cubic meters per day, important for supply of domestically produced gas.
No subsequent order has defined non-priority users.
While this Cabinet decision was for supply of APM or regulated gas, four sectors - fertiliser, LPG, power and city gas were categorised as priority sector for gas produced from blocks auctioned under NELP like Reliance's KG-D6.
Overtime this priority was applied to APM gas as well "as there was either huge subsidy implications involved or the end price is regulated," it wrote.
"The remaining sector apart from the above four sectors have been placed under the non-priority category as they are not price sensitive and have a capacity to absorb the high market determined price of gas and can pass on the high input price on to the consumers," the ministry said.
The ministry said the cuts applied on South Gujarat small consumers were after protecting their supplies up to 5000 cubic meters per day.
"As such cuts claimed by them to the extent of 45 to 58 percent are on additional quantity only and actual cuts on total supply to these consumers are 35 to 45 percent," it said adding the total APM gas allocation in the country is around 119 mmscmd and the current supply is around 41 mmscmd.
The ministry said "the decision to meet the full requirement of CGD entities for CNG and PNG segments by diverting the supply of domestic gas to consumers in the non-priority sector was taken as reduction in supply of domestic gas of other priority sector consumers has a direct impact on subsidy outgo of the government or it affects the general public."
