NEW DELHI, April 27 ? The logjam over the mega gas cracker project is likely to be resolved in a fortnight, with the estranged Oil and Natural Gas Corporation (ONGC) and Reliance Industries Limited (RIL) narrowing down their differences to 10 clauses including the one relating to quality of gas to be supplied. Union Petroleum and Natural Gas Secretary, BK Chaturvedi revealed this to the Parliamentary Standing Committee attached to his ministry. The Standing Committee, which is headed by Mulayam Singh Yadav, submitted its report to the Parliament this week. The Rs 3,700 crore Assam Accord project has suffered inordinate delay so much so that a frustrated Assam Chief Minister, Tarun Gogoi served an ultimatum of four months to all concerned parties to iron out their differences and start project work. ?The contract laid 436 clauses, out of which 426 have been finalised. We had discussions with RIL on the remaining 10 clauses. I am holding the next meeting on my level. I expect to finalise the contract in the next 15 days,? Sri Chaturvedi assured, adding that the Government wanted the contract to be finalised on the basis more or less similar to that finalised with the Oil India Limited (OIL).
The Petroleum and Natural Gas Ministry is not too happy with certain conditions put forth by the RIL. For instance, one of the areas of dispute related to liquidated-damages being sought by RIL. RIL has demanded that in case of the ONGC defaulted in supply of feedstock, it should pay a penalty, three times that of the value of damages. While in case of default by RIL, it would pay only the value of damage. The ONGC, on the other hand, has insisted that penalty should be same on both parties for defaulting. While negotiations are being carried on to resolve the dispute, the Petroleum Secretary contended that the gas supply agreement (GSA) could be finalised without referring to the disputed clause. As it is, there is a growing feeling within the Petroleum Ministry, Assam Government as well as the two oil companies that the deal is heavily loaded in favour of the RIL. Doubts have been raised about the sincerity of the RIL in executing the project, with the State Government informally requesting the Petroleum Ministry to look for new partners in case the RIL failed to start work within the deadline.
The Petroleum Secretary indirectly hinted at the possibility saying that once the feedstock problem was sorted out then there will be no problem. ?If Reliance or other private partners show interest, then we will try to implement the project fully,? he told the committee. The 10 disputed clauses that are yet to be resolved includes infinite negligence, which the ONGC has refused to agree to. The second dispute is on irrevocable letter of credit, on duration as well quantities and the extent of responsibilities of the ONGC in the entire project. The dispute is also on payments, with ONGC insisting on ?take and pay?, penalties of non-supplies, the appropriation of gas including quantity, the areas the manner of transportation as also the form in which gas would be sent. Other areas of disagreement relate to operational tolerance ? it can be tolerated if there is less supply of gas. The ONGC has stated that it very much needed the gas to further carry out production with the gas. The Petroleum Secretary striking an optimistic note on resolving the problem of scarcity of gas has suggested the RIL can make up the shortfall in gas supply by getting gas from feed plant in Assam.
The dispute over quantity of gas supply by ONGC is, however, the main bone of contention between the two parties. Assam gas cracker project, which is estimated to produce 2 lakh tonnes of ethylene, would require 6.35 lakh tonnes of feedstock, out of which the OIL has committed to supply 5 lakh tonne. The remaining 1.35-lakh tonne was to be supplied by the ONGC. However, ONGC has cautioned that the quality of gas supplied for the project may not be up to the standard, as they do not have adequate gas supply. Further ONGC has stated that it would be able to supply 1.35 lakh tonnes of gas only till 2020. Thereafter, supplies will depend on the availability of gas.