NEW DELHI, May 15 ? The contentious gas supply agreement between the Oil and Natural Gas Corporation (ONGC) and the Reliance Industries Limited (RIL) has been clinched, thereby clearing a major hurdle in the implementation of the mega gas cracker project in Assam. The resolution of the dispute between the ONGC and the RIL was announced at a review meeting of the gas cracker project, chaired by Union Chemical and Petrochemical Secretary, Vinay Kohli here yesterday.
According to sources, the Ministry of Petroleum and Natural Gas (P&NG) was expected to take another two to three weeks to identify an alternate agency, which would supply the gas to make up shortfall in supply of gas to the project. The Centre was forced to look for a third supplier as the ONGC has expressed it inability to supply its share of gas owing to shortfall in gas production in the region. The Reliance Assam Petrochemical Limited (RAPL) suffered time and cost overruns owing to serious disagreement over supply of gas, first with the Oil India Limited (OIL) and then with the ONGC. The contentious issue was resolved by the P&NG Secretary, B K Chaturvedi at a meeting held on May 5 with the officials of the ONGC and RAPL. At the meeting, the representatives of the RIL confirmed that the dispute over the Gas Supply Agreement (GSA) was settled and that they were ready to sign the agreement with ONGC.
The RIL and the ONGC has through prolonged negotiation managed to iron out 426 of the 436 clauses of the GSA. The remaining 10 contentious ones were sorted out within the 15 days deadline period. The 10 disputed clauses related to infinite negligence, over payments and the area and manner of transportation of gas. The review meeting yesterday decided that once the issue of feedstock was resolved, the project would be put on fast track as the Assam Government has already intimated that it was ready to hand over the land required for the project, as and when the RIL deposited the money for the land.
As reported by this newspaper the P&NG Secretary in a meeting of the Parliamentary Standing Committee attached to his ministry had given an undertaking to resolve the dispute over supply of feedstock between the ONGC and RIL in 15 days. The signing of the GSA with the ONGC was delayed because the oil company expressed its inability to supply the required gas for the project and instead suggested that RAPL should look for an alternate agency from among the various gas subscribers in the State.
In a bid to resolve the dispute Parliamentary Standing Committee suggested that ONGC should adopt the same set of guidelines adopted by OIL in finalising the GSA for the project. The suggestion was accepted by the P&NG officials, who concurred that the GSA with ONGC could be along the same line as the one signed with OIL. The settlement of the issue of the feedstock was one of the prime hindrance in the project getting off the ground, as the RIL was not willing to proceed without the GSAs.
The ONGC has been insisting on payments on the basis of take and pay. It was to supply 1.35 lakh tonne of feedstock, while OIL will supply 5 lakh tonne of gas. The ONGC has also 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 in the region. The RIL has contended that in case of the ONGC defaulting in supply of feedstock, it will have to pay a penalty, three times that of the value of damages. The ONGC on the other hand, had rejected it arguing that penalty should be same on both parties for defaulting.
The project a joint venture between Assam Industrial Development Corporation (AIDC) and the RIL is slated for commissioning within 44 months of starting of the project work. With resolution of the issue of feedstock the focus would now shift to acquisition of land for the project at Lapetkata in Dibrugarh district and Assam Government would be now under pressure to hand over the required land. It may be mentioned here that Chief Minister Tarun Gogoi had served an ultimatum of four months to resolve all the differences, after expiry of which the State Government might consider scrapping it altogether.