Reliance Industries Told To Sign GSPA With NTPC, 10 Gas Distribution Companies

NEW DELHI: The government has ordered Reliance Industries (RIL) to sign agreements with NTPC and 10 city gas distribution firms for supply of natural gas from its eastern offshore KG-D6 fields.
The Oil Ministry this month shot off three separate letters to RIL asking it to sign Gas Sales and Purchase Agreement (GSPA) with NPTC, city gas projects and Delhi’s Bawana project.
RIL has been ordered to supply of 2.16 million standard cubic meters (mmscmd) a day to NTPC and smaller quantities to city gas projects in Hyderabad, Kakinada, Delhi, Indore, Ujjain, Agra, Kota, Meerut, Dewas and Sonipat, sources said.
This followed directions by the Empowered Group of Ministers (EGOM) on natural gas allocation.
While the EGoM had allocated 2.3 mmscmd of RIL’s eastern offshore KG-D6 gas to NTPC, the Mukesh Ambani-run firm had in September, 2009, signed a GSPA with NTPC for supply of just 0.61 mmscmd due to capacity constraints in the pipeline carrying the gas.
The pipeline constraints had been totally removed since June, 2010, but RIL has been delaying the signing of a GSPA despite committing to supply 2.16 mmscmd through side letters to the September, 2009, GSPA, they said.
The Power Ministry, which had taken up the issue with the Oil Ministry several times, got this included in the agenda for the EGoM meeting in February, following which the ministerial panel headed by Finance Minister Pranab Mukherjee directed the RIL be asked to sign the GSPAs.
RIL has seen output from its KG-D6 field drop from 61.5 mmscmd in March, 2010, to less than 34 mmscmd, because of which it is not willing to commit supplies to new customers, including NTPC.
The fall in KG-D6 forced the Oil Ministry to first apply a pro-rata cut in supplies to all consumers in July, 2010, and with a further dip in output, it restricted supplies to only the core fertiliser, LPG and power sectors.
RIL, sources said, does not want to commit more gas unless production increases. If it is pressed, it may ask the government to name customers whose current gas supplies it should cut so that NTPC and other can be supplied gas.