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Urea plants had been given the first priority in sale of natural gas from Reliance Industries' D6 but the Bombay High Court had upheld the Ambani family, giving 70% of the initial volumes from the fields to Anil Ambani Group's RNRL. "The gas in question has been allocated (to fertilizer, power and other sectors) based on the Government's authority and rights under the Production Sharing Contract (for D6) aimed at regulating gas marketing and allowing their orderly growth," Fertilizer Secretary Atul Chaturvedi wrote to his counterpart in the Petroleum Ministry, RS Pandey, on 24th June.
"Our understanding is that any family settlement would not over-ride the sovereign right of Government to formulate policies aimed at larger public interest," he wrote.
When contacted, Pandey acknowledged receipt of the letter and said "they have raised an issue which will need to be examined".
"In this context, implications of the judgement will have to be legally examined," he said.
Twelve urea manufacturing companies were allocated 14.97 million cubic meters per day (mmcmd) when the government prioritised sale of the initial 40 mmcmd from D6 primarily between fertilizer and power companies based on national priority of food security and meeting energy deficit.
But the Bombay High Court on 15th June ruled that RIL should honour its commitment in the family split agreement and supply 28 mmcmd gas to RNRL. "If such a private arrangement has implications on already signed Gas Sales and Purchase Agreements for the allocated gas and if the existing rights of fertilizer companies are altered to their disadvantage, I am afraid they may also seek available legal remedies independently," Chaturvedi wrote.
He sought a re-confirmation from the Petroleum Ministry that "existing gas allocation, its price and GSPAs would remain intact."
The fertilizer industry, he said, had sought a re-confirmation to the effect that the recent Bombay High Court judgement would have no implications on the supply of gas from KG basin.
"The clarification/re-confirmation in this regard will remove the uncertainty in supply of feedstock to the fertilizer industry.
"This would also have implications on the fuel oil and naphtha based urea units, which are making large investments to switch feedstock to natural gas as per the declared policy of the government," he wrote.
Chaturvedi said the fertilizer industry was allocated about 15 mmcmd of gas from D6 as first priority under the Gas Priority Utilisation Policy of the Government.