Cut supplies to power plants: Govt to RIL

The government has asked Reliance Industries to cut natural gas supplies to power and fertiliser plants, a move that will allow new users like Essar Oil’s Vadinar refinery to receive gas from RIL’s Krishna Godavari D6 (KG-D6) fields.

The oil ministry issued written instructions this week to the Mukesh Ambani-run company, to make a “pro-rata” cut in gas supplies to all existing customers if the produce from KG-D6 cannot support new customers, sources with direct knowledge of the development said.

This follows the company announcing its inability to sign gas-supply contracts with new customers owing to production constraints. Though RIL’s Dhirubhai-1 and 3 fields in KG-D6 block can sustain an output of only 60 million standard cubic meters a day (mscmd), the ministry allocated about 64 mscmd.

RIL, so far, has signed or committed to sign agreements for supply of 57.8 mscmd of gas. The company told the oil ministry at a review meeting last month that it could only ink contracts on a firm basis for another 2.2 mscmd, as it did not want to sign for a product it did not have, the source added. The ministry had allocated gas to users who were not ready to receive the fuel and it was for this reason the Gas Sales and Purchase Agreements (GSPA) for 5.18 mscmd of gas could not be concluded.

Users awaiting signing of GSPAs include state-run NTPC (1.14 mscmd)and Essar Oil (0.6 mscmd), among others.