The Union Ministry for Petroleum and Natural Gas is likely to provide a lifeline for small and medium units served by gas from isolated wells in the Krishna Godavari basin by offering new contracts for five more years.

Following a representation made by the KG Basin Isolated Wells Consumers Association (KGBICA) on the hardships faced by the small units and the need to extend their contracts to run their units, the Ministry has agreed to offer them extension.

According to T Seshagiri Rao, President of KGBICA, when the association took up the difficulties faced by such small units and how the supply from GAIL and ONGC was vital for their future, Union Minister Dharmendra Pradhan responded positively assuring to protect their interests by renewing the contracts, which are due to expire on March 31.

The gas pricing complies with the guidelines revised by the Ministry in December 2014. According to thenorms, the pricing of natural gas from small/isolated fields was to be based on open competitive bidding in case of additional availability of gas after providing for supplies to existing customers and also in case of new production.

While the duration of existing contracts have been completed, the price would be determined by no objection certificates and calling bids through open competitive bidding.

The assurance from the Ministry comes as a big relief for the association as suppliers had proposed to stop gas supplies on expiry of current contracts and re-tender the isolated fields by calling for fresh bids.

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