After the Bell

Stock Informtion: Day one of the indefinite strike called by the public sector oil companies’ officers has started impacting the commercial sector. While the Petroleum Ministry termed it as a “mixed scene”, the strike has led to the shutdown of 17 urea units, affecting daily production of 43,000 tonnes. “On public life, impact of strike is nil, as of now. On commercial side, yes, on gas production, there is an impact. As far as ONGC is concerned, its oil production has declined to about 270,000 barrels a day from a normal 350,000 bpd, while the gas production from ONGC’s fields has come down to 17 mscmd from 50 mscmd,” Mr R S Pandey, Secretary Petroleum, said. Till late Wednesday night the Petroleum Minister and his officials were still waiting for the Oil Sector Officers’ Association (OSOA) representatives to come for negotiations. After repeated attempts to bring the officers to the negotiation table, the Government on Tuesday had also stated that it may be compelled to take stringent action against those who go on strike. More than 100 employees of oil PSUs were suspended and some arrested. OSOA, representing 14 oil PSUs, had called for a strike from Wednesday, as it felt that the recent pay revision announced by the Government did not address their demands in full. The 17 fertiliser units that have shut down include Indo-Gulf Fertilisers’ Jagdishpur, Tata Chemicals’ Babrala, Chambal Fertilisers’ Gadepan, Iffco’s Aonla and Phulpur, Rashtriya Chemicals & Fertilisers’ Thal, Kribhco’s Hazira and Shahjahanpur, and Gujarat State Fertiliser Company’s Vadodara. “These are all gas-based units receiving supplies through Gail India Ltd’s HBJ (Hazira-Bijaipur-Jagdishpur) pipeline. Since they (GAIL and ONGC, which produces the gas that goes through the pipeline) have stopped pumping, the units have had to shut down”, said Mr Satish Chander, Director-General, Fertiliser Association of India (FAI). “By Thursday we expect closure of three others plants, including Nagarjuna Fertilisers’ Kakinada and Iffco’s Kalol. That would take the total quantity affected to 50,000 tonnes per day”, Mr Chander claimed. According to him, even if the strike ends, it would take 2-3 days from resumption of operations. “The timing is bad because this is the time when demand for urea peaks on account of the standing rabi crop”, he added. As for units operating on naphtha and fuel oil, Mr Chander said that their operations will not be immediately affected. “These fuels, unlike gas, can be stored and, as of now, companies have inventories for 3-4 days”, he noted. The power sector may also feel the pinch if the feedstock supplies are affected for longer. NTPC Ltd, the country’s largest power generator, has reported fuel shortages at its gas-based stations, and has indicated at the possibility of shutdowns if the supplies were to be disrupted any further. Except for the Gandhar station, which is run purely on gas, most of NTPC’s other gas-based units are dual-fuel stations where both gas and naphtha can be used. “NTPC is currently using a combination of naphtha and available gas to tide over the immediate shortages. As of now, plants are being run on partial load to ensure generation for a longer duration. However, the situation could deteriorate if the strike were to continue, with naphtha feedstock also likely to run out in 3-4 days,” an official said. NTPC is in talks with private players, including Reliance Industries, for gas to plug the immediate shortages, an official said. Gas-based capacities across the country, including Tamil Nadu and Andhra Pradesh could also be faced with shutdowns. While the Petroleum Ministry claimed that the ATF supplies were not affected, the start of the strike saw some disruption in flights operated by Air India (Domestic) and Jet Airways.

Source : The Hindu Businessline