Anil Ambani may get priority gas if RIL picks equity

NEW DELHI: THE government may give preference in gas allotment to power projects of the ADAG group if RIL picks up equity stakes in them.

The brothers’ combined strength will enhance project viability, an official involved in the process of gas allocation said.

The Mukesh Ambani-promoted Reliance Industries (RIL) could reportedly buy equity stakes in gas-based power plants run by ADAG companies. Spokespersons of both the groups, however, denied any such development.

Globally, fuel suppliers regularly acquire equity in power projects to enhance their viability and cut risks, an expert said.

Project viability and magnitude are key issues involved in providing gas linkages to new plants, said a power ministry official. The ministry is in the process of finalising a fuel-linkage system that will provide gas to new power plants.

The proposed gas linkage, similar to the one in the coal sector, will rate projects for fuel allocation in order of priority and their level of preparedness, regulatory clearances and ability to execute projects on time, the official said.


EGoM to take decision

Anil Dhirubhai Ambani Group company RPL has land at Dadri in Uttar Pradesh, in Andhra Pradesh and Maharashtra with the necessary clearances, added the official. However, the power ministry is only a recommending authority. A final decision on gas supply will be taken by the empowered group of ministers, an oil ministry official said. The power sector is on the priority list of gas consumption, following the fertiliser sector.

The EGoM had, on January 8 last year, decided that the necessary allocations of gas from RIL’s KG-D6 fields would be made to RPL’s Dadri power plant when it would be ready to commence production.

“The requirement of natural gas for plants to be completed beyond 2009-10 would be reviewed from time to time by the EGoM for making firm allotments to such new plants from the fallback quantity available,” a statement issued by the ministry had said on November 16. The EGoM has so far allocated 61.61 million standard cubic metres per day (mscmd) from KG-D6 to various industrial users on a firm basis. Nearly 30 mscmd is allotted under the fallback option. A fallback allocation implies the sector will get gas if the firm allocation of other sectors is not fully consumed due to some reason.

Peak production from RIL’s KG fields is expected to go up to 120 mscmd from the current official figure of 80 mscmd. Gas supply in the country is expected to be 238-248 mscmd by 2012, while demand is expected to be in the range of 207-236 mscmd, according to a report prepared by Macquarie Research Equities.

The EGoM on natural gas is headed by finance minister Pranab Mukherjee and has oil minister Murli Deora, power minister Sushilkumar Shinde, law minister Veerappa Moily and home minister P Chidambaram as members.

“The country has a huge deficit in demand and supply of power. Large power projects backed by sound financials should be encouraged to accelerate the country’s capacity addition programme,” said an industry analyst. Gas-based power projects are faster to commission, as against plants that run on coal. NTPC chairman & managing director RS Sharma has said gas-based plants could come up between 18 and 24 months of securing clearances.