Fertiliser units get top priority for Reliance gas

June 25th, 2008 - 9:06 pm ICT by IANS  

New Delhi, June 25 (IANS) In a decision that impacts the supply of natural gas by Reliance Industries, the government Wednesday issued new guidelines for the commodity’s sale, giving top priority to the demands made by fertiliser units. Anticipating the fields in the Krishna-Godavari basin, off the Andhra Pradesh coast, to yield 25 million standard cubic metres (mmscmd) of natural gas a day from September, the new norms want all gas-based urea plants to be supplied the natural gas first.

The government expects these fields, which are with Mukesh Ambani-led Reliance Industries, to produce another 15 mmscmd from March 2009 and the new norms want the needs of other industries to be addressed later.

“Existing gas based urea plants, which are now getting gas below their full requirement, would be supplied gas so as to enable full capacity utilization,” said a press note issued by the petroleum ministry.

Following this, the guidelines - approved by a high-powered ministerial group headed by External Affairs Minister Pranab Mukherjee - say that a maximum of 3 mmscmd would be supplied to existing gas based liquefied natural gas plants.

The guidelines then want up to 18 mmscmd of natural gas to be supplied to power plants, which is just a part of the requirement for existing units as also for those units that are to be commissioned this fiscal.

Accordingly, Reliance Anil Dhirubhai Ambani Group (R-ADAG), which is fighting a legal battle over the issue with Reliance Industries for the supplies, is also likely to gas supplies but the charges for the same remained ambiguous.

Thereafter, a maximum quantity of 5 mmscmd would be made available to city gas distribution projects for supply of piped natural gas to households, as also for compressed natural gas for the transport sector.

“In case consumers in a particular sector, which is higher in priority, are not in a position to take gas when it becomes available, it would go to the sector which is next in order of priority,” the press note said.

“The priority for supply of gas from a particular source will be applicable only among those customers that are connected to the existing and available pipeline network connected to the source,” the note added.

The decision is expected to benefit 22 natural gas-based urea plants in India, since it is considered ideal feedstock for production of fertiliser. Due to the shortfall in gas, these plants use costlier alternatives like naphtha and fuel oil.

The guidelines also specified that producers will have to sell gas as per the marketing priorities of the government, which will also determine the formulae for pricing the commodity.

The decision will also benefit the supply of the commodity for cooking gas, also called liquefied petroleum gas, since the country currently imports some 25 percent of its needs.

The government has already decided to provide pipeline gas, considered a clean source of fuel, to all cities with population of over 2.5 million within the next three years. Presently, 12 cities in India have a population of over 2.5 million.

Cities with population between 1-2.5 million will also be covered later.

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