GAIL INKS PACTS WITH FERTILISER COS TO PIPE KRISHNA-GODAVARI (KG) GAS

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RELIANCE Industries’ (RIL) Krishna-Godavari (KG) basin gas is set to fuel fertiliser plants with the public sector gas transportation major Gail (India) signing transportation agreements with fertiliser firms.

Nagarjuna Fertilisers, Iffco and Chambal Fertilisers have already signed the deal and nine other fertiliser companies are expected to sign transportation agreements with Gail in a couple of days, a company official said.

Fertiliser Association of India (FAI) director general Satish Chander confirmed the development. “We felt that the initial draft from Gail was loaded in favour of them and fertiliser companies were at a disadvantage. So we objected till it suited both parties, and we are now signing the deal,” he said.

Some of the contentious issues that have been agreed upon include a 20-day shutdown period. Gail was initially insisting on 10 days, he said. The two parties also agreed on a commissioning period of three months. Despite inking gas sale-purchase agreements with fertiliser companies, RIL was unable to transport KG gas to them due to differences over terms of agreement between Gail and consumers.

Fertiliser companies had felt that Reliance Gas Transportation Infrastructure’s (RGTIL) agreement was more flexible than the terms offered by Gail. RGTIL is the gas transportation arm of RIL with access to limited geographical areas, an expert involved in the deal said. “However, RGTIL could offer a better deal to fertiliser companies as its parent company is also the producer of the gas and willing to take more liabilities than a pure transporter firm (Gail),” he said.

“It took us time because this is the first-of-its-kind transport contract being signed. This is as per international norms, we just wanted an assured return on our investments but our contract is not harsh at all,” Gail chairman & managing director UD Choubey said.

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