The Hindu Business Line : Panna Mukta Tapti seeks to be free of APM burden — Wants to market directly the entire gas production

THE Panna Mukta Tapti (PMT), joint venture between ONGC, British Gas and Reliance, will approach the Union Petroleum and Natural Gas Ministry this month, seeking release of six million standard cubic metres (mmscmd) of gas for direct marketing in the next fiscal.

PMT now supplies 6 mmscmd of gas out of a total production of 10.8 mmscmd to GAIL for supplies to the power and fertiliser sectors in North India, at an administered price of $3.86 per million metric tonne British thermal unit (mmbtu).

For the rest of the output, which was released for direct marketing last year, the joint venture gets a minimum of $4.08 per mmbtu from Gujarat State Petroleum Corporation Ltd (GSPCL), Gujarat Gas, Indian Petrochemical Corporation Ltd and others.

Stating that the company had ready buyers for the additional six mmscmd gas, a senior PMT official told Business Line that GSPCL which has laid a 3,000 km gas grid in Gujarat had an insatiable demand for natural gas at market prices. "Moreover, Gujarat Gas and Reliance are also interested in securing supplies at a much higher rate than the APM price."

NTPC, though wanting more gas, is not ready to pay market prices for existing supplies through the GAIL system. According to rough calculations, if PMT is allowed to sell its entire production at market prices, its profits will increase by approximately by Rs10 crore in 2006-07.

It may be mentioned that the APM era was formally withdrawn last year allowing PMT to market its entire production at market prices. However, reacting to stiff opposition from power utilities, especially NTPC and the gas transporter GAIL, who described PMT's demand of close to $ 4.2 per mmbtu as unrealistic, the Ministry of Petroleum and Natural Gas intervened in the matter.

PMT was asked to continue supplies to GAIL of 6 mmscmd gas at an administered price of $3.86 per mmbtu (higher than the APM price of 2.6 per mmbtu (inclusive of transportation cost) for one year ending March 31, 2006.

"We will soon approach the Ministry seeking release of six mmscmd gas from APM pricing. We will also cite the recent agreement between ONGC and Rajasthan State Power Generation Corporation Ltd for supply of gas at $4.6 per mmbtu," sources said.