R-Power may now seek gas allotment from KG-D6 fields

After merging 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 for allotment. As per 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 Reliance Natural Resources Ltd (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 KG-D6 field on terms laid in 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 fields has been allocated to units that could consume the fuel immediately.

Since KG-D6 fields has finite resources, output will have to be capped and volumes above that will have to reserved for production when Reliance Power plants are built. Alternately, the government will have to cut supplies to existing customers to accommodate future plants of Reliance Power.

Though Anil Ambani Group had submitted the revised GSMA to the oil ministry for perusal, the EGoM could not have made allocation to RNRL - the 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, fertilizer units and refineries that are already in 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 Shahapur plant in Maharashtra.