The Hindu Business Line : Row likely over GAIL marketing rights

Kolkata. Jan 28 Unless there is a revision, the sudden change in Centre’s policies in handing over the marketing rights of Panna-Mukta- Tapti gas to GAIL (India) may emerge as the centrepoint of a wider controversy.

While the State government is maintaining a steady composure, and is “hoping for a revision in the Centre’s decision sooner or later”, sources say that some movement is anticipated.

According to sources, the supply from PMT to Gujarat Gas (GGCL) and GSPC is already down by approximately 2.5 million standard cubic metre a day (mmscmd). Of the two, GSPC – the state spearhead in the energy sector – has been hit the most as larger part of its purchases from PMT were on spot basis.

According to GSPC sources, if the outcome of the series of meetings conducted by the Union Ministry of Petroleum and Natural Gas between October 26 and November 11, 2007 “regarding gas supplies from PMT” are of any consequence, GSPC’s existing long term contract of 1.3 mmscmd may also be scrapped once it comes up for renewal in March 2008.

In other words, PMT supplies to GSPC, already halved from 3.4 mmscmd to approximately 1.7 mmscmd, is subjected to further reduction. The company is also struck by the fact that long-term LNG supplies from Petronet have also dropped - – within the agreed terms and conditions - from 3.2 mmscmd to 2.8 mmscmd.

The cut in availability of natural gas or long term LNG has naturally forced GSPC to depend on spot LNG, now selling at $ 18 per mmBtu, to meet the supply gap. The company has already increased its prices by 20-30 per cent.

GGCL may also have to depend on LNG to maintain supplies sooner or later.

While the Centre is yet to take a decision on the plea for a policy revision by GSPC (and British Gas), the Gujarat Energy Minister Mr. Saurabh Patel, feels that the development will seriously impact the textiles, fertiliser, ceramic tiles and many other user industries.

“Gujarat is home to the country’s largest market price linked gas infrastructure including two LNG terminals, transmission and distribution systems. Naturally the recent decision will hurt it the most,” Mr Patel told Business Line.

“In July 2005, the then Union Petroleum Minister Mr. Mani Shankar Aiyar, advised us to bid for supplies from PMT at market-related prices. We did just that. It is, therefore, unjustified on the part of the Centre to take such a drastic step without consulting us,” Mr. Patel added.

“It is a blatant attempt to stall industrialization of Gujarat,” says GSPC managing director Mr. D J Pandian.

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