: Fertilizers and Chemicals Travancore has struck a deal with GAIL India Limited for supply of natural gas through MMTC Limited. The deal is for supplies up to March, after which a term contract for one year is expected to be worked out, FACT sources said on Thursday.
According to the terms of the contract, FACT will get natural gas at $12.5 per mmBtu. Once the State government notifies its decision to forgo value added tax, gas is expected be cheaper by about $1.5, sources added. They said that gas flow was now scheduled to begin on February 7.
The gas supply agreement is a breakthrough that has come after nearly a month of negotiations .
The public sector fertiliser company has its hopes pinned on a revival package from the Union government, which is looking at the Board for Reconstruction of Public Sector Enterprises for financial assistance worth Rs. 991 crore.
The company management has also submitted long-term expansion and diversification plans for the future centred on the availability of natural gas at sustainable rates.
The sharp drop in crude price has raised the prospects of FACT getting natural gas at affordable rate.
The recent consignment to arrive in Kochi at Petronet LNG’s terminal has been offered at 15.34 per mmBtu. The offer by the State Government to waive VAT on gas will slash another $1.87 per mmBtu.
Meanwhile, Board for Industrial and Financial Reconstruction postponed its meeting on FACT, which was scheduled for January 23. The meeting has been postponed following a request from the Union Ministry for Chemicals and Fertilisers.
FACT to get natural gas at $12.5 per mmBtu
Agreement is for supplies up to March
FACT has its hopes pinned on a revival package from the Union government worth Rs. 991 crore.
