R-Power may seek gas from KG-D6 fields

EGoM may meet to decide if exceptions to policy can be made.

After merging Reliance Natural Resources Ltd (RNRL) with itself, Anil Ambani Group firm Reliance Power is likely to apply to the government for allocation of natural gas, reasoning that it being an end-user meets the eligibility criteria.

According to the government's gas utilisation policy —the Supreme Court has upheld its validity — natural gas can be allocated only to an end-user and traders like RNRL are barred.

Industry sources said though Mukesh Ambani-led RIL had signed a new gas sales master agreement (GSMA) with RNRL, expressing its intent to supply natural gas from its KG-D6 field on terms laid in the government's pricing and utilisation policy, it could not have entered into an actual gas sale purchase agreement (GSPA) with it, as such a pact can only be signed with end-users.

Reliance Power is now expected to formally apply to the government, seeking allocation of natural gas to its proposed Dadri plant near here or any other power plant.

Sources said an Empowered Group of Ministers may meet as early as this month to decide if exceptions to the present policy can be made so that Reliance Power's proposed plants can get fuel from KG-D6 fields by reserving or blocking certain volumes for it.

At present, the gas utilisation policy does not provide for reservation or blocking of natural gas for future plants and all of the output from KG-D6 has been allocated to units that could consume the fuel immediately.

Since KG-D6 fields have finite resources, output will have to be capped and volumes above that will have to reserved for production when Reliance Power plants are built.

Or, the government will have to cut supplies to existing customers to accommodate future plants of Reliance Power.

Though the Anil Ambani Group had submitted the revised GSMA to the oil ministry for perusal, the government could not have made allocation to RNRL - a trading company.

Sources said the EGoM headed by Finance Minister Pranab Mukherjee would also decide if Reliance Power can jump the long queue of power plants, fertiliser units and refineries are already in the line seeking gas.

The GSMA, which Reliance Power will inherit after the merger, does not mention of volume, tenure or price of gas but only lists the requirement of gas at its proposed units, including the 7,800-Mw Dadri plant near here and the Shahapur plant in Maharashtra.