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| Ambani brothers sign gas sale pact |
| BS Reporter / Mumbai Jun 26, 2010, 00:30 IST |
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 The revised deal, however, does not mention the price, tenure of supply and the quantity of gas.
Meeting the six-week deadline set by the Supreme Court, Reliance Natural Resources (RNRL), promoted by Anil Ambani, today signed a revised gas sale master agreement (GSMA) with Reliance Industries (RIL), promoted by elder brother Mukesh Ambani, for supply to the former's proposed power plant at Dadri in Uttar Pradesh, close to Delhi.
“The said Gas Supply Master Agreement is compliant with the (government’s) Gas Utilization Policy and EGoM (empowered group of ministers) decisions,” RIL said in a statement.
THE GAS PIE
KG-D6 gas allocation decided by EGoM
(in mscmd) |
| Power |
43.17 |
| Fertiliser |
15.51 |
| CGD |
2.83 |
| Steel |
4.19 |
| Refineries |
11.00 |
| Petchems |
1.92 |
| LPG |
3.00 |
| Captive power |
10.00 |
| Total |
91.62 |
The revised GSMA is pursuant to the court's May 7 judgment, turning down RNRL's plea for cheap gas from RIL based on an earlier family agreement.
RNRL had sought 28 mscmd of gas for 17 years at $2.34 per million British thermal units (mBtu) from RIL; the latter had declined to do so, citing later government policy. SC struck down the RNRL claim, saying the government was the owner of all natural gas, no matter who discovered it, and would have to approve any pricing and allocation.
Crucial bits for govt
The revised GSMA, however, does not mention the price, tenure of supply and the quantity of gas agreed between RIL and RNRL. Till these are decided, said officials from the ministry of petroleum and natural gas, the agreement isn’t of much significance. It is the government which will have to approve these.
"They (RIL and RNRL) are just going through the motion of signing the agreement, as they had been asked to do so by the Supreme Court. The agreement does not hold water without mention of specific quantity, tenure and pricing,” said an official.
At RIL’s 36th annual general meeting on June 18, Mukesh Ambani had said, "As and when the power plants of ADAG (the Anil Dhirubhai Ambani Group) are ready, we will commence supplies, subject to government granting allocations to these plants.”
RNRL, in a filing to the Bombay Stock Exchange, said, “RNRL will now take appropriate steps requesting the government for expeditious allocation of natural gas to facilitate implementation of the same.”
At present, RIL is producing 60 million standard cubic metres of gas per day (mscmd) of gas from the KG-D6 basin (off Andhra), which has been allocated according to the official gas utilisation policy. The plan is to raise production to 80 mscmd. The government has already allotted up to 90 mscmd of gas from the D6 field in the Krishna-Godavari basin for a period of five years.
No spare supply
A senior government official said allocation letters have been issued for 80 mscmd of gas. “RIL is currently producing about 62 mscmd of gas, so the commitment is more than the production,” he said. There is an unallocated quota of 10 mscmd, meant for use by captive power plants if the production goes up. RIL’s gas production is not expected to exceed 80 mscmd for another eight years.
GSPAs have been signed with about 50 customers in line with the policy for 69 mscmd. Ministry officials add there are at least 200 applications, amounting to 350 mscmd of gas supply, still pending from various power companies, with projects at various stages of implementation.
The government’s press note of November 16, 2009, committed gas allocations of 61.61 mscmd on a firm basis and another 30 on a fallback one. Firm allocation entitles a company to first right on the gas, while the fallback gives temporary supply in the event of spare quantities being available.
Though the press note said the requirement of natural gas for power plants completed beyond 2009-10 would be reviewed by an empowered group of ministers for allotments from the fallback quantity, Anil Ambani’s Dadri plant is nowhere near completion.
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