RIL, RNRL dispute may be resolved soon

NEW DELHI: In what could lead to the first major breakthrough in the dispute between the Ambani brothers, the government on Thursday intervened to ensure that gas from RIL���s KG basin would be given to the proposed Dadri power project by Reliance Power, provided the fuel was available.

The Empowered Group of Ministers on gas, headed by foreign affairs minister Pranab Mukherjee, has decided that RIL would provide gas to Reliance Power for its 7,480 MW gas-based power project at Dadri, Uttar Pradesh, subject to availability. Although, Reliance Power���s Dadri project is still a long way off, the assurance of fuel supplies will help Reliance Power to arrange funding for the project.

Reliance Power has acquired bulk of the land, and has received crucial clearances like the environmental clearance for the project, an official in Reliance Power said. The availability of fuel was a crucial issue for the developers of the project, the official, who asked not to be named, said.

The government���s intervention, which comes ahead of RIL���s gas production plans, is expected to also settle the impending court case between RIL and Reliance Natural Resources, that has been on for more than two years now.

RIL, which is in the last leg of tying up its gas production plans from the Krishna Godavari region off the Andhra Pradesh coast, had petitioned the Bombay High court to vacate the stay order restraining it from selling gas.
The two companies will now be under pressure from the government to reach an out-of-court settlement, a person in the know said.

The high-powered meeting that took place late in the evening on Thursday reached a decision after a prolonged discussion on the availability of the gas and the demand for the fuel in the upcoming years. The eGoM, was convened after a political meeting at the highest level on Wednesday, a person with knowledge of the developments said on condition of anonymity. Home minister P Chidambaram and deputy chairman of the Planning Commission Montek Singh Ahluwalia, who are members of eGoM, were absent from the meeting.

RIL had invited price bids from power and fertiliser companies in 2008 to sell gas from the KG basin. Reliance Power had projected a demand for 28 units (million standard cubic metres per day) of gas to fuel its plant at Dadri. RIL, which is the first private oil and gas company to sell gas in the open market, had been directed earlier by an eGoM decision to sell the first tranche of gas, about 40 mmscmd, at $4.2 per unit to fertiliser, power and city gas plants.

The government had put in place a gas utilisation policy, by which existing power plants (which are unable to operate for want of gas) and fertiliser plants have been given a priority.