Fertiliser industry seeks clarity on gas supply

India’s fertiliser industry wants the government to intervene in the gas row between the two Ambani brothers to ensure an early settlement even as the Reliance Industries looks set to challenge the Bombay High Court (BHC) ruling in the Supreme Court.

Fertiliser companies have invested heavily to switch onto the natural gas from costly naphtha and have a lot at stake in the gas dispute between Reliance Industries and RNRL. RIL has entered into an agreement with 12 fertiliser firms to supply gas at a price of $4.2 per million metric British thermal units (mmBtu).

However, in a recent judgment over the dispute between Reliance Industries and RNRL over supply of gas, the Bombay HC ruled in favour of latter saying that RNRL would get assured supply of 28 mmscmd for 17 years at $2.34 per mmBtu. The court gave one-month time period for both parties to complete agreement.

However, Reliance Industries is understood to be all set to challenge the ruling in the Supreme Court and the fertilizer industry apprehends that the dispute may delay the supply of gas to it. The fertilizer secretary in this wake is expected to seek clarification from the petroleum ministry that gas supply to the fertilizer units would not be disrupted due to the court order.

As per the gas policy, fertilizer companies are to get top priority in the supply of gas, followed by power plants that are sitting on idle capacity for want of gas. However, the policy may not hold well in case the Reliance Industries has to give the gas to RNRL first