RIL resolves issues with fertiliser units

Reliance Industries has resolved almost all issues with fertiliser firms,who are first in line to receive natural gas supplies from the Mukesh Ambani-run company’s prolific KG-D6 fields....

Written by Press Trust Of India | New Delhi | Published: March 11, 2009 1:34 am

Reliance Industries has resolved almost all issues with fertiliser firms,who are first in line to receive natural gas supplies from the Mukesh Ambani-run company’s prolific KG-D6 fields,and is likely to sign gas supply agreements this month. Reliance has offered liberal take-or-pay terms in the revised Gas Sales and Purchase Agreement that is being sent to nine fertiliser units this week for possible signing along with Gas Transportation Agreement this month. Sources said fertiliser units will necessarily have to pay for 90 per cent of the volumes allocated to them in a year even though they may not draw even a single cubic meter. But they will have the liberty to take the quantities not drawn,in the next year.

Reliance would extend the five-year supply contract by three months to enable companies to draw the volumes they may not have taken previously. The company will refund money for volumes remaining even after this three-month period.

Sources said the company,which is likely to begin gas supplies from KG-D6 next month,would not sign supply-or-pay agreement (Reliance having to pay if it defaults on supplies) as it has no marketing freedom to sell the fuel. The refund clause in the take-or-pay agreement would be the first of its kind in the world as globally gas supplies give only a grace period for drawal of fuel not taken previously,they said. Fertiliser companies will pay Reliance the rupee equivalent of $4.20 per million British thermal unit price of the natural gas from the Krishna-Godavari basin fields.

In the draft gas supply agreement circulated last month,the Fertilizer Association of India had raised the issue of only two fields — Dhirubhai 1 and 3 — in KG-D6 block being earmarked for supplies to the urea making units. Reliance has responded to this,saying it cannot commit supplies from the entire block as only two fields have till now been approved by the Government for development.

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