GAIL serves dues notice to Agra units

The minimum consumption guarantee dispute between the GAIL (India) Ltd and Agra industrialists has taken a serious turn.

Taking steps to recover its dues worth Rs 7 crore, GAIL has served dues recovery and disconnection notices to the foundry units of Agra, demanding the payment of all dues according to the minimum guarantee agreement signed by the foundry units.

Cornered by GAIL's threats to shut down gas supply to the units, foundry unit owners of Agra and Firozabad recently held a meeting at the National Chamber of Industries & Commerce (UP) in which they decided to raise this issue before the Union petroleum ministry in Delhi on July 24.

They decided to demand a waiver of the minimum guarantee due to the low consumption of natural gas in the foundry units in the absence of modern cupola furnaces.

The industrialists have also decided to demand an increase in the gas quota of Agra and Firozabad from 1.1 million metric standard cubic metres per day (mmscmd) to 1.4 mmscmd as the gas volume being supplied by GAIL currently in both cities does not meet the demand and a lot of industrial units are still awaiting to be connected to gas pipelines.

According to GAIL sources, at the time it had laid pipelines to supply natural gas to foundry units in Agra and Firozabad, GAIL had signed minimum consumption guarantee agreements with individual units and in anticipation of the success of an indigenously developed cupola furnace, the industrialists had signed the agreements.

But as the efforts to develop a cupola furnace failed, the foundry units failed to adhere to the agreements and demanded waiver of the outstanding amount of Rs 4 crore charged by GAIL according to the agreement.

The dues continued to pile up despite the foundry unit owners moving the court against the recover of dues and at present the dues are close to Rs 7 crore, for which the company had now served recovery notices to the foundry units.