Concerned that a further slippage in investment could cost the economy dear, the government has asked Reliance Industries (RIL), which accounts for about a third of India’s gas output, to enter into new supply pacts with 16 leading consumers on the priority list.
According to official sources, the petroleum ministry has asked RIL to sign natural gas sale and purchase agreements with these priority consumers in the fertiliser, power and city gas distribution sectors. The company had earlier apprised the ministry of its inability to start supplies to these users in view of the sharp dip in KG-D6 output.
These are the priority customers that were allotted gas by the empowered group of ministers (EGoM) led by Pranab Mukherjee but are yet to ink purchase deals.
RIL has not been ready to commit supplies to more customers as possible supply cuts in future would put these customers in a difficult spot once investments are made counting on such supply contracts. There have been certain precedents of such problems faced by gas users. Companies including Essar Steel have already moved court against gas supply cuts by RIL prompted by reduced supply.
The unmet allocation to priority sector is a little less than 4 million metric standard cubic metres a day (mmscmd), which is roughly a tenth of RIL’s 42 mmscmd gas output from the field now. The company needs about 52 mmscmd of gas to meet its obligation to all priority consumers.
The oil ministry, which is seeking the EGoM’s approval for a road map for supply cuts to even priority sector consumers in the event of a further decline in gas production, is set to inform the ministerial panel that instructions have been issued to RIL in this regard, said an official who is privy to discussions within the government.
According to official sources, the petroleum ministry has asked RIL to sign natural gas sale and purchase agreements with these priority consumers in the fertiliser, power and city gas distribution sectors. The company had earlier apprised the ministry of its inability to start supplies to these users in view of the sharp dip in KG-D6 output.
These are the priority customers that were allotted gas by the empowered group of ministers (EGoM) led by Pranab Mukherjee but are yet to ink purchase deals.
RIL has not been ready to commit supplies to more customers as possible supply cuts in future would put these customers in a difficult spot once investments are made counting on such supply contracts. There have been certain precedents of such problems faced by gas users. Companies including Essar Steel have already moved court against gas supply cuts by RIL prompted by reduced supply.
The unmet allocation to priority sector is a little less than 4 million metric standard cubic metres a day (mmscmd), which is roughly a tenth of RIL’s 42 mmscmd gas output from the field now. The company needs about 52 mmscmd of gas to meet its obligation to all priority consumers.
The oil ministry, which is seeking the EGoM’s approval for a road map for supply cuts to even priority sector consumers in the event of a further decline in gas production, is set to inform the ministerial panel that instructions have been issued to RIL in this regard, said an official who is privy to discussions within the government.
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