When Amit Shah talks Pradhan listens hard

Vol 18, PW 18 (07 May 15) People & Policy

Some say BJP party president Amit Shah is so powerful even Prime Minister Narendra Modi obeys his instructions.

So what choice did oil minister Dharmendra Pradhan have when Shah marched into his office on March 19 leading a delegation of Gujarat factory owners? They were angry at the government's 'isolated field guidelines' issued on December 19, 2014 that would have forced around 75 factories in Gujarat to re-bid for ONGC gas once their current contracts ran out. This in turn would mean shutting down while waiting for a decision.

"Pradhan listened patiently and promptly gave in," says a source. "He is all powerful in the BJP.

When Shah speaks all Modi's ministers sit up and listen." Sure enough, on April 1 ministry undersecretary SP Agarwal issued a circular over-turning the ministry's 'isolated field guidelines' issued last December.

Agarwal's order exempts around 75 small factories in Gujarat and 22 factories in the Rajahmundry area of Andhra Pradesh from re-bidding for gas with immediate effect. Under the revised guidelines, contracts for these companies will be automatically renewed every two years.

"We would have had to shut down our production," one ceramics factory owner tells us. "Big companies would have taken all the gas."

In Gujarat 75 factories producing glass, tiles, ceramics, sodium silicate and other raw materials consume up to 700,000 cm/d of gas at $5.05/mmbtu from ONGC's isolated fields.

Hasmukh Thakkar, president of the Gujarat Isolated Fields Natural Gas Consumer Industries Association, tells PETROWATCH: “It is a big relief to gas consumers with factories near isolated fields. Small factories play an important role in the development of rural India.” Thakkar adds many small factories were specifically set up near isolated fields in remote areas of Mehsana, Ahmedabad and Ankleshwar as factory owners are responsible themselves for transporting gas from ONGC’s fields to their premises. “These factories function in desolate locations and provide employment to thousands of poor rural people,” says Ashok Dholakia, vice-president of the association. “If bidding was allowed, big companies would have come in, compressed the gas and taken it away to their factories elsewhere.” Most of the gas from these isolated fields comes at a low pressure and is supplied by ONGC on a 'fall back' basis or as and when it is available. “Most of this gas was being flared,” adds Dholakia. “At least we are putting it to good use.”

When Amit Shah talks Pradhan listens hard

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