New panel on gas allocation mooted

Deora met T K A Nair, Principal Secretary to the Prime Minister for constitution of an Empowered Group of Ministers (EGOM) on the lines of the previous ministerial panel headed by the then External Affairs Minister Pranab Mukherjee.
“The previous EGoM had decided on allocation of first 40 mmscmd of gas from RIL’s KG-D6 fields. Now there is a need to revive the mechanism so that we can allocate gas beyond these levels to new customers,” Deora told reporters here.
Petroleum Secretary R S Pandey, he said, has made a formal written request for the same to Cabinet Secretary.

The previous eGoM, which ceased to exit with General Elections in May this year, had allocated the first 40 million standard cubic meters per day of gas from KG-D6 to fertiliser units, power plants, city gas  projects, LPG plants and steel sector.
RIL, however, now has capability to produce close to 60 mmscmd, but is restricting output to 36-37 mmscmd because of lack of government-identified customers.
“Pricing is now an issue as the (previous) EGOM has already set gas price for five years,” Pandey said, adding the issue may be considered by the panel if one of the constituents were to raise it.

Price issues
“No customer who has been allocated KG-D6 gas has stated that they do not want to take the gas because the price is high,” Pandey said.
RIL has so far contracted gas supplies to 15 fertiliser firms, 19 power plants and three steel makers. It has also signed a Gas Sales and Purchase Agreement (GPSA) with GAIL for supply to its LPG plant and Indraprastha Gas Ltd for city gas.
But some of the customers identified by the government so far are not taking KG-D6 gas for reasons other than price, Pandey said.
Ratnagiri Gas and Power Pvt Ltd (RGPPL), the firm that operates the Dabhol plant, state-run NTPC and Essar Power are yet to draw even a single unit from RIL’s KG basin D6 fields. GAIL as well as some city gas projects too are yet to begin drawing gas.

RGPPL has signed for 2.7 mmscmd but is not taking any gas as it has a contract to buy gas from Petronet LNG Ltd till September-end. NTPC, which was allocated 2.67 mmscmd, has not signed the contract with RIL so far. Industry sources said the GSPA with NTPC may also be signed soon. All outstanding issues have been settled.
Fertiliser firms, which had been given the first right over KG-D6 gas, are drawing 14.5 mmscmd.

 Fifteen fertiliser firms have been allocated 14.96 mmscmd gas. Power firms are drawing 18 mmscmd, while steel makers like Essar are drawing between 3.5 and 4 mmscmd. The company can not sell gas to any of the users, including its own refineries, which are starved of the fuel, unless allocation is approved by the government.

Last week, RIL Executive Director and Head of its Oil & Gas Business P M S Prasad had written to Pandey demanding that new customers be identified soon. RIL, he said, was supplying 37 mmscmd of gas to customers identified by the government. Some of the power and steel firms are drawing more than their allocated quantity on ‘fall-back’ or temporary basis as quota for NTPC, Dabhol and Essar remained unutilised.