Reliance Industries Ltd (RIL) is no mood to swallow any more bitter pills from the Government.

The company has told the Petroleum Ministry that it will sign additional gas sale and purchase agreements (GSPAs) only if the Government informs the existing customers that they might face D6 gas supply cuts.

Sources said the company does not want to face any legal glitches from its existing customers due to supply cut. As it is, with the drop in D6 output, the customers have faced supply cuts. If new customers are added, the existing ones will face further cut.

In March, RIL was asked by the Petroleum Ministry to sign agreements with city gas distribution and power sector companies for pending allocations amounting to 4.045 million standard cubic meter a day (mscmd).

To this, the company responded that the quantity of gas under GSPAs already signed was higher than the availability, leading to shortfall in supplies.

Reliance has come in for severe criticism for not being able to check the falling output from the producing fields in D6 block since it hit a peak of 60 mscmd in end 2009.

The output is expected to further drop to 27.60 mscmd in 2012-13 (D1 and D3 fields to produce 20.20 mscmd and MA fields 7.40 mscmd).

In a letter dated April 30, RIL informed the Petroleum Ministry that due to reduced gas availability, supplies were currently being made in line with the order of sectoral priority specified by the Government.

This has resulted in cessation of supplies of petrochemical, sponge iron and refineries, in spite of the GSPAs signed based on allocations made by the Empowered Group of Ministers (EGoM).

From mid-September 2011, supplies to the city gas distribution sector customer, with whom GSPAs had been signed, have also had to cease. “Based on current availability, supplies to power sector customers have also been reduced on pro-rata basis. They are currently supplied only to the extent of around 56 per cent of the contracted quantities under the GSPA,” the company said.

RIL also said that the signing of GSPAs will not result in commencement of any supply to the customers in the city gas distribution sector. Only when the Ministry confirms that it has intimated to the existing customers, as was done while deciding the sectoral priorities, will the company go ahead and sign GSPAs with power sector customers, it said

But this will be on the basis that the contractor (RIL) will stand indemnified from and against claims, if any, made by the existing customers, which may arise because of implementing this directive, a source said.

RIL further said that this has nothing to do with its contentions on gas pricing.

richam@thehindu.co.in

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