Tripura battles ONGC over unfair gas pricing

Vol 16, PW 15 (21 Feb 13) People & Policy

Tripura Natural Gas (TNGCL) is threatening to disrupt gas supplies to state capital Agartala unless ONGC backs down over attempts to charge it market rates.

“We have informed ONGC that we will not pay $4.20/mmbtu,” says a TNGCL source. “Let them stop gas supplies; the entire piped gas network in Agartala will shut down.

” Under attack is ONGC’s decision to charge TNGCL the ‘market determined price’ of $4.20/mmbtu after December 2012. ONGC was earlier charging only $2.52/mmbtu – a special subsidised rate for India’s troubled north east.

TNGCL officials scheduled a meeting with oil ministry joint secretary gas Dr Neeraj Mittal on February 11 to complain but the meeting could not take place as Mittal was busy. TNGCL has a domestic gas allocation of 1.3m cm/d from the ministry and sells around 81,000 cm/d in and around Agartala.

ONGC stands accused of misinterpreting a May 2010 oil ministry directive which says gas sales beyond 50,000 cm/d should be charged at market price. TNGCL argues it is wrong to apply this vaguely worded circular to gas bought from ONGC as it is a re-seller and not end user.

“ONGC wants us to pay market price for the entire quantity (81,000 cm/d) not just that exceeding 50,000 cm/d,” says TNGCL. Tripura officials feel ONGC is being unfair as all its gas is extracted from local fields awarded without a tender.

“Gas from such fields should be sold at a subsidised price as ONGC did not bid to win them,” we are told. TNGCL says the 40% subsidy on Tripura gas is essential to attract industries.