The government has raised natural gas allocation to fertiliser units and power plants to 43.2 million metric standard cubic metres (mmscmd) for the current fiscal year, up from 29 mmscmd in the previous year, chemicals and fertiliser minister Ram Vilas Paswan said.

The decision was made at a meeting of the empowered group of ministers (EGoM) which met to finalise gas allocations for 2008-09.

Fertiliser plants will get first priority, while existing gas-based power plants will get second priority, followed by city gas distribution projects, under the interim allocation formula.

This interim formula will be used for allocation of gas from Reliance Industries' KG basin fields. Reliance is expected to pump 40 million standard cubic meters per day (mmscmd) of gas from the third quarter this year.

The government is yet to finalise a gas utilisation policy.

The power ministry, however, is seeking higher allocation to run gas-based power projects to full capacity. The power sector is also last in the priority order for gas allocation for greenfield projects.

Power ministry had earlier sought allocation of 77 mmscmd of gas for existing and upcoming projects . The power sector requires 60 mmscmd of gas to run 13,334 MW of existing gas-based projects at 90 per cent plant load factor. Additional gas would be required for running 1,285 MW of gas-based capacity that is ready for commissioning.

The new formula, however, makes a 5 mmscmd gas allocation for gas projects meant to keep cities pollution-free as per the direction of the Supreme Court.

Other sectors, including LPG, petrochemicals, refineries, sponge iron units etc, would also get a lion's share of gas allocation this year with release of close to 50 mmscmd of gas.

While the total allocation of gas, at 140 mmscmd this year, will still leave a huge demand-supply mismatch, actual supplies during 2007-08 were to the tune of 102 mmscmd against a demand of about 180 mmscmd.