Association seeks fair deal with ONGC for extension of gas supply agreements

Says small industries will close down in the absence of fuel alternatives

The KG Basin Isolated Wells Consumers Association (KGBICA), an association of gas-based small and medium industries located in the interior rural areas of Andhra Pradesh, is opposing Oil and Natural Gas Corporation Limited (ONGC)’s proposal to re-auction the isolated gas wells instead of extending the current gas supply agreements (GSAs) with the allottee industries.

“The GSAs executed by ONGC with the industries prior to 2000 were valid initially for a period of five to six years, which on expiry were extended for additional blocks of five years. Such GSAs are now due for expiry during 2015 and 2016. It is understood that ONGC is now proposing to re-auction these wells instead of extending the validity of the existing GSAs as was done on earlier occasions,” said Sarath Joseph Gummadi, coordinator of KGBICA.

He alleged ONGC had abruptly stopped gas supplies from Vygreswaram isolated fields (in East Godavari district) to one of their members, Steel Exchange from January this year without any notice. The corporation was supplying around 2,000 SCMD as against the allocation of 10,000 SCMD to the company. Gummadi said ONGC had informed that they wanted to re-tender the gas from this well since they got a quote of $11 in one of the tenders last year elsewhere in the state.  

For another industry, Vijai Bhavani Power, he said the GSA for 3,000 SCMD from Kesanapally fields was expiring on March 31, 2015, and ONGC was going for re-tendering.

“ONGC is already flaring about 70,000 SCMD of gas at Kesanapally for the last six months (ever since the pipeline blow-out in East Godavari district) Till then, ONGC was compressing this gas and pumping it to the main grid, which they are unable to do now since the blown pipeline is yet to be restored completely. They want to add to this loss by adding another 3,000 SCMD that they look to deny to Vijai Bhavani Power,” he said.

When contacted, ONGC officials declined to comment.

"The industries will have to close down due to the absence of workable alternative fuel options. We have made representations to ONGC and MoPNG at the highest level and action is awaited on this. We are also meeting chief minister N Chandrababu Naidu tomorrow to seek state government's support," he said.
 

KGBICA comprises over 20 industries and has members across sectors like power, ceramic and vitrified tiles, steel pencil ingots and steel re-rolling, cold storage, ice and other allied industries. These industries have made a collective investment of over Rs 2,200 crore, and are providing direct and indirect employment to around 15,000 people.

According to Gummadi, most of these industries are also categorised as small consumers by the ministry of petroleum and natural gas (MoPNG), with gas allocations of up to 50,000 standard cubic meters per day (SCMD). The total gas allocation of these industries is 330,000 SCMD.