Fertiliser industry for status quo in priority for gas allocation

Ahead of an empowered group of ministers (EGoM) meeting, the fertiliser industry has said status quo should be maintained in the sectoral priority in allocation of gas from Reliance Industries consortium-operated KG-D6 fields in the eastern offshore.

It has cautioned the government that the move to change the priorities in allocation of natural gas would affect domestic urea output, result in higher imports and increase subsidy levels.

The Fertiliser Association of India (FAI), in a letter to Agriculture Minister Sharad Pawar, said allocation of gas currently from the Reliance Industries consortium-operated KG-D6 fields in the eastern offshore -- production of which has dwindled to 14 million metric standard cubic metres per day -- to the fertiliser sector has not been fully met.

"We understand that the ministry of petroleum and natural gas has proposed review of sectoral priority allocation of KG-D6 natural gas. Affecting change in the priority for fertilisers at this stage and diverting 10 mmscmd of gas from the fertiliser to the power plants will not resolve power sector problems but will add to the woes of the fertiliser-making production in both sectors inefficient," FAI Director General Satish Chander said in the letter.

The industry wants first priority for fertilisers in the allocation of natural gas to continue. Depriving the sector of its allocated gas will force the industry to either reduce urea production or use more and more of imported Liquefied Natural Gas (LNG), FAI said.

Out of the total domestic production of urea of 22 million tonnes, 14 MT is being produced using domestic gas with the balance manufactured from imported LNG and naphtha.

"The fertiliser industry, therefore, earnestly requests that status quo be maintained in the sectoral priority in allocation of KG-D6 gas," Chander wrote.

The EGoM, headed by Defence Minister A.K. Antony, is expected to meet Wednesday to consider the oil ministry's proposal of abolishing the priority for gas allocations.