Andhra to hold talks with RIL, GSPC on gas supply

The Andhra Pradesh government is planning to hold a meeting very soon with Reliance Industries Limited (RIL) and Gujarat State Petroleum Corporation (GSPC) on the issue of allocation of gas from the K-G Basin for the requirement of local industry as well as other sectors in the state.

The government will press for a commitment from both the entities who have discovered huge gas finds in the K-G Basin to evacuate gas to other parts of the country only after fully meeting the state's requirement.

"We have been insisting on both RIL and GSPC meeting the gas requirement of our state before taking it to other states. We will discuss both the issues of supply and modalities with them at the forthcoming meeting," a senior government official told Business Standard today.

The state government is also seeking a differential pricing for the state. However, it is waiting for the Centre to announce its policy on pricing and the appointment of a pricing regulator before asking the gas producers for any price concession for the state. "As of now, the industries department and APGenco have come up with their assessment of gas requirement for the state though some internal meetings are still on," the official said.

As the two major players in the K-G Basin have not spelt out their policy on allocation of gas when they begin production sometime in 2008, the local industry and investors are in a dilemma as to how to plan their projects.

As per the earlier practice, the state government used to recommend to the Union petroleum ministry for gas linkage for a particular project or a company from the public sector Gas Authority of India Limited (GAIL).

Though some companies like Lanco Power entered into an MoU with Reliance for the supply of gas long ago, they too are not sure of the methodology or a framework the gas suppliers are going to follow in allocation and supply of gas.

The management of Vizag Steel, at a recent seminar, requested R P Sarma, president (Gas Business), Reliance Industries, to give a clear picture so that it could plan future capacity expansions.

The state government, on several occasions, expressed its wish to have a role in the allocation of private gas keeping in view the interests of the state.