Protests precede new HBJ gas supply cuts

Vol 7, PW 23 (11 Feb 04) Midstream & Downstream

It was no easy task for oil secretary BK Chaturvedi to play umpire at the Gas Linkage Committee meeting on 13th January.

Chaturvedi had to walk the tightrope between dwindling gas supplies from ONGC, demands for more gas from the fertiliser and power ministries and a Supreme Court ruling that priority should be given first to the transport sector, followed by the power sector and finally state-owned companies. A source at the GLC meeting tells this report that the loudest protests came from the fertiliser ministry, which vehemently argued against any additional gas supply cuts for fertiliser factories along the HBJ.

The fertiliser ministry joint secretary pointed out that fertiliser units are getting much less than their contracted quantities of gas, we are told. The fertiliser ministry official added that, the use of natural gas as a feedstock in fertiliser units is superior to its use as fuel in power stations and so fertiliser factories should get higher priority than power stations in gas supply.

The GLC meeting was also informed that fertiliser factories should be given their full requirement of natural gas to meet the agricultural sectors need for fertilisers during the forthcoming winter sowing season. Not to be outdone, power and steel ministry officials at the GLC meeting also demanded more supply of gas to their respective sectors.

If GAIL had been allowed to have its way at the GLC meeting, the additional cuts would have been far sharper. We learn GAIL proposed a 15% cut on Category-2 consumers and a 33% cut on Category-3 consumers, to better manage the demand-supply situation.

Thankfully, the oil ministry overruled GAILs proposal and settled for milder cuts.