RNRL makes its case to fertiliser ministry on K-G gas issue

In a letter to Union Chemicals and Fertilisers Minister M K Azhagiri on its case for committed fuel from the Krishna-Godavari basin, Anil Ambani’s Reliance Natural Resources Ltd (RNRL), has said that estranged brother Mukesh’s Reliance Industries Ltd (RIL) would have sufficient gas from there to meet the requirements of the country’s fertiliser sector, which already has a prior allotment.

The letter also says the gas supply arrangement by RIL to RNRL was a result of the corporate group restructuring that followed “a truly transparent due process of law”, upheld by the board of directors and the over two million shareholders of RIL and sanctions by the Bombay High Court in 2005. It, said the letter, “is not a private arrangement”.

The letter, dated June 30, has been written in the wake of reports suggesting that the Bombay High Court’s June 15 directive to RIL to supply 28 mmscmd (million metric standard cubic metres a day) of gas for 17 years — and another 12 mmscmd, if required — to RNRL would affect other sectors.

RIL, which started producing gas from its D6 block of the Krishna-Godavari basin in April, has committed nearly 30 mmscmd to a clutch of fertiliser, power and steel companies.

Fertiliser Secretary Atul Chaturvedi has written a letter to the petroleum ministry for confirmation on behalf of the Fertiliser Association of India that all present and future contracts by RIL will be honoured.

Both RIL and RNRL have moved the Supreme Court: RIL to challenge the Bombay High Court’s directive, and RNRL to prevent RIL from supplying up to 40 mmscmd of gas to anyone other than itself.

“As per the approved development plan of the K-G basin and various submissions made by RIL, gas production would increase to 80 mmscmd within this year, which is expected to further increase to 120 mmscmd, which is higher than the current domestic production of gas,” says RNRL’s letter. The company therefore believes that there will be enough to spare after meeting the commitment to RNRL.