The proposed new policy of re-tendering isolated wells instead of renewing the existing gas supply agreements (GSAs) will hit small and medium gas-based industrial belts of KG Basin, according to T Seshagiri Rao, president, KG Basin Isolated Wells Consumers Association (KGBICA).
The gas-based industries operate in various isolated gas fields of ONGC and GAIL in the KG Basin of Andhra Pradesh and these isolated gas fields are located away from the main grid, interconnected by a local grid.
“ONGC is threatening to stop gas supplies to the industry and go for re-tendering of wells which is detrimental for the survival of industries,” alleged Rao, also the chairman of Sentini Group of Industries.
According to Rao, gas allocation to the industries was made by KGBICA by the ministry of petroleum and natural gas (MoPNG), till the year 2012.
Later on, as the gas allocation policy evolved, ONGC was delegated the responsibility of allocating natural gas to promising industries through open tendering process. These industries have tied up for gas supply with GAIL or ONGC.
Gas supply agreements executed with the allottee industries by ONGC are valid for a period ranging from six months to five years or more based on the estimated life of the isolated wells. The GSAs executed by ONGC with a few consumer industries prior to the year 2000 were valid initially for a period of five to six years, which on expiry, were extended for additional blocks of five years.
“Such GSAs are now due for expiry during the years 2015 and 2016. It is understood that ONGC is now proposing to re-auction these wells instead of extending the validity of the existing GSAs as done on earlier occasions,’’ he said.
Responding to these allegations ONGC officials said, “Post implementation of ‘New Domestic Gas Pricing Guidelines, 2014’, the ministry of petroleum and natural gas, revised the small/isolated field guidelines on December 19, 2104.”
As per the guidelines, “in case of new supplies or where the duration of existing contracts have been completed the price would be determined by NOCs by calling bids through open competitive bidding process”. Therefore, ONGC shall be acting based on the prevalent instructions of government.
The isolated gas fields are located in Lingala-Kaikalur, Pedana, Malleswaram, in Krishna district, Kammapalem, Kesanapalli, Antarvedi, Upplaguptam, Vygreswaram in East Godavari district and Penugonda in West Godavari district.
The association, comprising of more than 20 industries from diverse sectors such as power, ceramic tiles, vitrified tiles, ceramic table ware, steel pencil ingots manufacturing, steel re-rolling, cold storage and ice and other allied industries, have made a representation to MoPNG on this issue.
KGBICA says the industries have made a collective investment of over R2,200 crore and provide direct and indirect employment to around 15,000 people.
