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THE tables have turned for Reliance Industries' (RIL) gas from the Krishna Godavari (KG) basin. Barely two months ago, when RIL started production, there were many buyers eager to get the gas first to their starving units. But two months down the line, it's a different story. Faced with the prospect of underutilisation of its gas, RIL is scouting for consumers. RIL sources have confirmed to ET Nowthat the company is producing less than its current capacity. "We can produce 40 mmscmd of gas, but we are forced to produce only 26 mmscmd because of underutilisation," said a top RIL official.
The problem started with NTPC, which has still not signed the sales purchase agreement with RIL for buying gas. Of the total 18 mmscmd allocated for power, NTPC's quota is about 3 mmscmd. However, India's largest power producer is believed to be going slow in signing binding contracts because of its as yet unresolved legal dispute with RIL, which is being fought out in the Bombay High Court.
NTPC is also apparently demanding certain changes in the gas sale and purchase agreement (GSPA) related to marketing margins, which is not possible for RIL. "Uniform agreements have been entered into with about two dozen buyers in fertiliser and power sectors on terms negotiated by ministries of power, fertiliser and petroleum. How do we change it for NTPC alone now?," said an RIL source.
Another prospective consumer, Ratnagiri Gas Power, better known as Dabhol Power, has finally signed the GSPA, but has not started sourcing the KG basin gas. Its total quota is about 2 mmscmd.
The story is no different for fertiliser units which were the first to get this gas on a priority basis. Fertiliser units were allocated 15 mmscmd units and the gas was expected to revive many of the fuel-starved units, along the HBJ pipeline. But the fertiliser sector is using only 75-80% of that quota. "We are using less due to annual shutdown in two of our plants, but the bigger problem is caused by the sudden surge in the APM gas, which is coming through GAIL," said Satish Chander, director general, Fertiliser Association of India.
The APM gas comes at a much lower price of $2/ mmbtu against RIL's rate of $4.20/mmbtu, and fertiliser companies have taken the APM gas first. The quantity that GAIL is pushing through is higher than what the fertiliser sector had taken into account while making projections for RIL gas.
RIL has approached the petroleum ministry over the gas utilisation issue, and the ministry has called for a meeting with fertiliser and power ministries on Friday to resolve the KG Basin gas issue. "It is unfortunate that the gas, which was so eagerly awaited, is now going unutilised," a senior source in the ministry told ET Now.
The problem started with NTPC, which has still not signed the sales purchase agreement with RIL for buying gas. Of the total 18 mmscmd allocated for power, NTPC's quota is about 3 mmscmd. However, India's largest power producer is believed to be going slow in signing binding contracts because of its as yet unresolved legal dispute with RIL, which is being fought out in the Bombay High Court.
NTPC is also apparently demanding certain changes in the gas sale and purchase agreement (GSPA) related to marketing margins, which is not possible for RIL. "Uniform agreements have been entered into with about two dozen buyers in fertiliser and power sectors on terms negotiated by ministries of power, fertiliser and petroleum. How do we change it for NTPC alone now?," said an RIL source.
Another prospective consumer, Ratnagiri Gas Power, better known as Dabhol Power, has finally signed the GSPA, but has not started sourcing the KG basin gas. Its total quota is about 2 mmscmd.
The story is no different for fertiliser units which were the first to get this gas on a priority basis. Fertiliser units were allocated 15 mmscmd units and the gas was expected to revive many of the fuel-starved units, along the HBJ pipeline. But the fertiliser sector is using only 75-80% of that quota. "We are using less due to annual shutdown in two of our plants, but the bigger problem is caused by the sudden surge in the APM gas, which is coming through GAIL," said Satish Chander, director general, Fertiliser Association of India.
The APM gas comes at a much lower price of $2/ mmbtu against RIL's rate of $4.20/mmbtu, and fertiliser companies have taken the APM gas first. The quantity that GAIL is pushing through is higher than what the fertiliser sector had taken into account while making projections for RIL gas.
RIL has approached the petroleum ministry over the gas utilisation issue, and the ministry has called for a meeting with fertiliser and power ministries on Friday to resolve the KG Basin gas issue. "It is unfortunate that the gas, which was so eagerly awaited, is now going unutilised," a senior source in the ministry told ET Now.
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