Meeting to address shortfall in supply of D-6 gas : Issues raised by RIL, GAIL, RGPPL and IPPs

The following are some other issues raised by stakeholders during the meet chaired by the petroleum ministry to pay heed to concerns with regard to supply of D-6 gas:

• Independent Power Producers (IPPs): IPP of Andhra Pradesh, such as GVK, GMR and Konaseema, submitted that they have long term PPAs with APTRANSCO. Their plants were ready for operation in the year 2005 and 2006, however, the plants could not be operated since gas was not available for three years. The initial cost of power plants has increased considerably on account of additional Interest during construction (IDC). The PPA provides for recovery of fixed cost at 85% PLF, while gas has been made available for operating at 75% PLF and with cuts there is a further shortfall of about 15%. This makes the operations of the power plants unviable. 
• RGPPL: A separate EGoM has taken decisions which led to the revival of the project and ensuring availability of gas was an important parameter of making RGPPL viable. The EGoM on pricing and gas availability has decided to give priority to RGPPL at par with fertilizer sector.
• GAIL: GAIL submitted that it is using gas for production of LPG. LPG is a subsidized product in which the country is not self-sufficient. The LPG fractionators were established along with the HVJ pipeline as LPG extraction from gas was a national priority. Any disruption in supplies of LPG would lead to public outcry in the country. Further, GAIL is a part of under-recovery mechanism for supporting the low fuel prices in the country and cannot be burdened with higher production costs of LPG. 
• Reliance Industries Ltd (RIL): RIL submitted that it discovered the gas price from fertilizer and power sectors and drafted the GSPAs accordingly. Later, government has identified customers for gas. The agreement has a provision for pro-rata cuts amongst the customers, but also has provisions that government directives are binding. The EGoM has taken a decision that higher fractions should be extracted from gas and, accordingly, LPG and petrochemicals should be considered for full supply of gas.