Small and medium-scale enterprises who use natural gas from independent wells in the Krishna-Godavari Basin area are a worried lot due to supply concerns.

They want the pipeline link to be completed and their contracts renewed to ensure better gas supplies.

A 42-km pipeline, which would prove to be a lifeline for 20-30 odd companies engaged in the manufacture of ceramic tiles, tableware, steel pencil ingots and cold storage chains, has been completed except for a 400-metre stretch that needs to be linked up but has been pending for more than 18 months.

The Krishna-Godavari Basin Isolated Wells Consumers' Association (KGIWCA), which held a broad-based meeting of all the consumers of gas supplied from the KG Basin isolated fields, has requested the Ministry of Petroleum and Natural Gas, the State Government, and the main suppliers, ONGC and GAIL, to ensure that they get adequate gas to keep their companies going.

These isolated gas fields are located in Lingla-Kaikalur, Malleswaram, Antarvedi, Penugonda in Krishna, East and West Godavari districts. The gas produced from these isolated gas fields is mostly associated gas, an offshoot of oil producing wells. It is a source of additional revenue to the producer, who gets to monetise the gas.

“More than Rs 2,200 crore has been invested in these companies, which employ about 15,000 people. There is need to ensure steady supplies to these companies to keep their businesses going. These SMEs come under priority sector gas allocation just as fertiliser plants. It is crucial to revive the contracts. Use of any other gas makes these companies financially unviable,” Sharath Joseph Gummadi, Vice-President, Sentini Ceramics, told BusinessLine .

Explaining the fuel supply arrangements which these companies enter into with ONGC and GAIL, he said these contracts range from two years to five years and are revived based on the availability of gas. The supply of gas ensures these companies are bankable. Use of any other gas makes them financially unviable for most companies, he explained.

Most of these industries are categorised as small consumers by the Union Ministry, with gas allocation of 50,000 scmd. The total gas allocation to these industries is about 3,30,000 scmd, which is small from the overall gas supplies perspective, but crucial for the survival of these companies.

Therefore, the association has made a fervent appeal to ensure fuel supplies to these units, which play a major role in bringing about socio–economic development in their region.

Gas supply to Steel Exchange India and Vijai Bhavani Power has been stopped and new contracts are underway. Both these units are faced with tough times. Ever since the pipeline blowout in East Godavari, ONGC is flaring up 70,000 scmd. Before the blowout, it was pumping the gas into the grid, the association said.

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