?Sufficient gas for fert units?

Allaying the fears raised by the fertiliser ministry, the ADAG company Reliance Natural Resources (RNRL) said that there will be suficient KG D6 gas available to meet the requirement of fertiliser sector which has been allowed 15 mmsmcd from KG basin under the gas sale purchase agreement (GSPA) between RIL and fertiliser units.

RIL is expected to increase the production to 80 mmscmd within this year which is expected to further increase to 120 mmscmd which is quite higher than the current domestic production. RNRL made it clear that RIL & RNRL arrangement is not a private arrangement and it was not arbitrarily decided. However, it was the result of corporate group restructuring that followed a fully transparent due process.

RNRL in its communication of June 30 to the fertilisers and chemicals minister MK Azhagiri, the copy of which was released on Sunday to the press, said ?The GSPA between RIL and fertiliser units is for existing units which are stranded assets and only for a short tenure of five years. This cannot be compared to long term 17 year supply to the new power plants in the power sector for which the gas supply has been upheld by the Bombay high court order in its June 15 order. The high court has asked RIL to supply 28 mmscmd of KG D6 gas to RNRL for 17 years at $2.34 per mmbtu.?

RNRL made it clear that as per the GSPA all existing consumers of KG gas are fertiliser companies that were either not operating due to non availability of feedstock or based on expensive alternate liquid fuels.

RNRL?s letter is crucial as the fertiliser secretary last week in his communication to the petroleum secretary had expressed concerns over the fate of about 15 million cubic meters per day of gas allocated from the Krishna Godavari basin fields of RIL to 12 urea-making firms and has sought assured supplies. ?The industry is concerned after the judgement of the Bombay High Court according to which Reliance Natural Resources Ltd is to get 28 mmscmd of gas from the KG basin,? Fertiliser Association of India had said in a letter to fertiliser secretary Atul Chaturvedi.

The fertiliser secretary was also concerned over the provision on reduction in the gas availability whereby the seller may by prior notice reduce buyer?s quantity on a pro rata basis and the contract period. However, RNRL noted that as per media reports even the current allocation of 15 mmscmd of gas is not being fully used by the designated consumers and some allocated consumers have contractual issues.