Financial Daily from THE HINDU group of publications
Wednesday, Jan 12, 2005
Financial Daily from THE HINDU group of publications Wednesday, Jan 12, 2005 |
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Industry & Economy
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Petroleum GAIL to supply gas to RCF through Dahej-Uran pipeline Archana Chaudhary
Mumbai , Jan. 11 GAIL India Ltd has signed a five-year agreement with Rashtriya Chemicals and Fertilizers Ltd (RCF) for supplying close to two million cubic metres a day of natural gas through its proposed Dahej-Uran pipeline. This makes RCF among the first customers to buy gas that will flow through GAIL's 475-km pipeline project. The Rs 1,830-crore Dahej-Uran pipeline was delayed after the Union Government directed Gail to re-tender its purchase of steel pipes. The two companies have agreed on a price of a little more than $4 per million British thermal unit (mBtu) for the gas that is expected to flow from December 2006, a senior RCF official said. This is against the earlier benchmark of $3-3.5 per mBtu of gas as agreed by fertiliser companies. As per the deal, if the high-powered Group of Ministers (GoM) finalises a cheaper price for natural gas, GAIL will either have to cut its price or exit from the agreement. The companies will soon sign a final gas sales agreement, the official said. Earlier, at a meeting of the Union Cabinet, the Petroleum Ministry's proposal to raise the price of natural gas for fertiliser and power units was referred to the GoM. The Ministry had proposed to raise the price of natural gas by 12 per cent for fertiliser plants and by 26 per cent for power stations in the interim period till complete deregulation of the natural gas business. The GoM reportedly plans to allocate lower natural gas prices for the fertiliser industry. The Petroleum Ministry had proposed raising the price of natural gas from Rs 2,850 per thousand cubic metres to a fixed price of Rs 3,200 per thousand cubic metres for fertiliser units and Rs 3,600 per thousand cubic metres for power companies. According to a GAIL official, other companies have also agreed to sign gas purchase agreements soon. The Dahej-Uran pipeline project that was to be completed by January 2006 has now been delayed by a year.
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