Business Daily from THE HINDU group of publications
Friday, Mar 27, 2009
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Business Daily from THE HINDU group of publications Friday, Mar 27, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Corporate
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Outlook Industry & Economy - Fertilisers
The initial production from the D6 block is estimated at 40 mmscmd, of which 15 mmscmd is to be supplied to the fertiliser sector. Our Bureau New Delhi, March 26 The gas sale and purchase agreement (GSPA) between Reliance Industries Ltd (RIL) and the country’s major urea manufacturers is all set to be sealed on Friday. “There were some contentious issues between us and the seller. They have been by and large resolved. So we will go ahead with inking the GSPA,” a fertiliser industry source said. The GSPA envisages supply of gas from RIL’s Krishna Godavari basin D6 block at a landfall price of $4.2/mBtu. This price excludes pipeline transmission tariff, marketing margin, and State levies. “We had issues with regard to the marketing margin to be paid to RIL for its gas from D6 block. They were asking for 15 cents, whereas we were willing for only 12 cents/mBtu. We have temporarily settled for 13.5 cents,” the fertiliser industry source told Business Line. The transmission tariff is to be decided by the Petroleum & Natural Gas Regulatory Board, even as Reliance Gas Transportation and Infrastructure Company (RGTIL), a Reliance Group company, which would be ferrying RIL’s D6 gas, has indicated a range to its customers. The tariff would be levied on the volume of the gas and could range from $0.17 to $0.45 within Andhra Pradesh and $0.93 outside the State. The initial production from the D6 block is estimated at 40 mmscmd, of which 15 mmscmd is to be supplied to the fertiliser sector. An Empowered Group of Ministers (EGoM) had decided on the priority sectors to which the D6 gas will be allocated. The other sectors include, power, gas-based LPG plants, and city gas projects. Industry concernsA major concern expressed by the fertiliser industry was on gas supplies to urea units in the event of decline in production from the fields. While RIL proposed that supply cuts in this case would be pro-rated to original sector-wise allocations, this was not acceptable to the fertiliser companies. They felt that since they had been accorded a priority status in allocations, there could be no proportionate distribution of gas. “We have proposed that the decision in such circumstances should be left to the EGoM,” fertiliser industry sources said. More Stories on : Outlook | Fertilisers | Petroleum | Reliance Industries Ltd
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