The Hindu Business Line : Fertiliser Ministry pushes for gas pacts with suppliers

New Delhi, Nov. 5 To ensure that fertiliser companies receive assured gas supplies, the Ministry of Chemicals and Fertilisers has pitched for the need to have GSPAs (gas sales and purchase agreements) with prospective suppliers.

The Department of Fertilisers has written to the Petroleum Ministry to nominate one of the public sector undertakings under the latter’s administrative control as the designated authority to deal with all aspects of gas supply to fertiliser units and act as a one-stop window for this sector.

This is to enable the existing fertiliser companies to achieve financial closure for their plans of optimum capacity utilisation, expansion, de-bottlenecking and conversion to natural gas.

A shortage of gas has meant inadequate supplies to the companies. At a recent Empowered Group of Ministers (EGoM) meeting on issues related to pricing and commercial utilisation of gas under the New Exploration Licensing Policy (NELP), the Fertiliser Ministry is said to have raised the issue of GSPAs for committed supplies. A GSPA is normally signed between the seller and buyer of the gas.

Sources told Business Line that the EGoM has decided that the Petroleum Ministry would facilitate the finalisation of GSPAs by fertiliser companies.

With gas from Reliance Industries Ltd’s D6 block in the Krishna Godavari Basin expected to flow early next year, each sector is looking for its share of gas.

“The GSPAs signed between the fertiliser companies and the designated authority under the Petroleum Ministry would have clearly spelt terms and conditions under which both parties would function,” the sources added.

The Department of Fertiliser has also provided the Petroleum Ministry with data on projected gas requirements for the entire Eleventh Plan Period during which it expects new capacities to come up, both in brownfield and greenfield projects.

According to the projections, gas requirements for the existing fertiliser units, which stands at 43.17 MMSCMD in 2008-09, will go up to 56.18 MMSCMD in 2009-10 when some of the existing units are scheduled to raise production.

This is expected to go up further to 64.61 MMSCMD in 2010-11 by when the eight closed units of Hindustan Fertiliser and Fertiliser Corporation are revived by converting them into gas-based units.

In order to ensure that the non-gas based units do not have any problem in securing gas once they are converted, the Petroleum Ministry has assured the Fertiliser Ministry that these units would be connected by pipelines by 2010-11.

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