Oilmin won't force RIL to sell cheaper gas

NEW DELHI: Growing pressure from gas-consuming industries such as the fertiliser sector is unlikely to cut much ice with the petroleum ministry, which is not in favour of offering special discounts to any industry. Reliance Industries will be free to negotiate gas deals with companies and charge market rates. The government may, however, protect fertiliser companies through subsidy and can take its share (profit petroleum) in kind to supply gas to priority sectors. Gas from RIL’s D6 block is expected to flow from July 2008.

“The blocks awarded under the new exploration and licensing policy (NELP) are governed by the respective production-sharing contracts (PSCs) and the operator has the freedom to market the gas and set the price according to an agreed formula,” a source in the petroleum ministry said. It is learnt that chemicals & fertiliser minister Ram Vilas Paswan has written to petroleum minister Murli Deora seeking his personal intervention to ensure ‘adequate allocation’ of gas from RIL’s KG basin at ‘reasonable price’.

As per the PSC, RIL is free to allocate gas to consumers. “Gas is a national resource and the company would not be in a position to refuse any consumer, including fertiliser companies, provided they (consumers) are willing to pay the price,” a government official said.

“In the worst-case scenario, the government may take its profit petroleum (government’s share in the KG basin gas) in kind and market it directly to consumers,” he added. But as things stand now, fertiliser units will have to directly approach the supplier (RIL) and enter into sale and purchase agreements.

Fertiliser companies, however, expressed their “apprehensions on various terms and conditions for the supply of gas and pricing formula” set by RIL, a source in the department of fertiliser said.

In a letter to petroleum secretary MS Srinivasan, fertiliser secretary JS Sharma had said: “The supply of Reliance gas to the fertiliser sector is necessary to meet the present shortfall of gas available to this sector and also to meet the increasing requirement in future. You may, therefore, like to take up the issue with RIL to ensure that adequate allocation of gas is kept for the fertiliser sector”.