Agra units in a tight spot

GAIL revokes earlier decision to waive CNG consumption cost

At a time when more and more Agra industrial units are beginning to opt for compressed natural gas (CNG), a recent decision taken by Gas Authority of India Ltd (GAIL) threatens to jeopardise the survival of almost 200 industrial units of both Agra and Firozabad.

According to the decision taken recently by the GAIL board, while the industrial units of Agra and Firozabad have been freed from signing a minimum consumption guarantee agreement for the gas consumed by them from August onwards, industrialists of both Agra and Firozabad have been asked to pay for their past gas consumption, which had been waived by GAIL.

This is as per the terms of the MGO agreement signed earlier by them with GAIL, for the past 3-4 years, and this has raised their gas bills by Rs 30-40 crore, threatening the closure of almost 60-70 units in Agra alone.

Angered by the decision, the industrialists of both the towns have decided to raise this issue before the Union petroleum minister, under the aegis of the National Chamber of Industries and Commerce (NCIC), UP, while even threatening to take legal action against GAIL for its monopoly in the gas sector.

Talking to Business Standard, Anil Verma, president, NCIC, UP, said following the Supreme Court decision to prohibit the use of fossil fuels in the industries falling in the Taj Trepezium Zone, the industrialists of both Agra and Firozabad were forced to use CNG supplied by GAIL as an alternative fuel for their units since 1991-92, for which they were made to sign a deal, constraining them to use at least 80 per cent of the demanded gas and even if the gas was not used, they would still have to pay for the guaranteed gas consumption volume.

He said instead of signing a composite deal for Agra and Firozabad for the 1.1 mmscmd CNG supplied to these towns, GAIL asked the units to sign individual deals, resulting in the under-consumption of gas at most of the units due to the lack of technology for the optimum use of gas in the furnaces and the industrialists continued to pay for the actual gas usage instead of the guaranteed amount after negotiating with GAIL.

According to Verma, due to the efforts made by the Agra Member of Parliament Raj Babbar, GAIL board agreed to stay its decision on the extraneous bills in March this year, till the issue was settled but in a recent meeting of the board, it was decided that the industrialists shall have to pay for the earlier MGO amount pending since several years, raising bills worth tens of crores against over 200 industrial units of both Agra and Firozabad.

He said that out of the affected units, atleast 60-70 were of Agra while the rest of them were from Firozabad.

These units had recently applied with the NCIC's CNG cell for mediation with the GAIL authorities and the central government on this matter and after taking the issue in its hands, NCIC has decided to raise the problems of the industrialists with the Union Minister for Petroleum while as an alternative recourse, the NCIC could also resort to taking legal action against GAIL before the end of August.