Fertiliser industry says gas pact with RIL unfair | business | Hindustan Times
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Fertiliser industry says gas pact with RIL unfair

The fertiliser industry has alleged that the GSPA with RIL for gas from the D6 gas fields in the Krishna Godavari basin is “inequitable” and loaded in favour of the Mukesh Ambani-controlled company.

business Updated: Mar 10, 2009 20:56 IST
Anupama Airy

The fertiliser industry has alleged that the gas sales and purchase agreement (GSPA) with Reliance Industries Limited (RIL) for gas from the D6 gas fields in the Krishna Godavari basin is “inequitable” and loaded in favour of the Mukesh Ambani-controlled company.

One major concern raised by the Fertiliser Association of India is that RIL is restricting the availability of gas. “In the GSPA, the sources of gas has been restricted to two gasfields only—D1 and D3,”said the FAI in a letter to the government. FAI believes that this would take out of RIL the obligation to supply gas from the entire field.

The association also wants to double the agreement’s term to 10 years from five.

The industry also says there is no provision for penalty payments from RIL if the supply runs short. FAI says the agreement specifies that consumers will get gas on a pro-rata basis only after RIL and its affiliates meet their captive needs, and this goes against the government policy that declares the fertiliser sector as a priority area.

A senior official at the Ministry of Chemicals and Fertlisers told Hindustan Times that the industry’s concern had already been taken up with the Petroleum Ministry, which in turn has sought comments from RIL.

The industry is also uncomfortable with an obligation that buyers must enter into their own gas transportation agreements.