RIL signs KG gas deals with power companies including Anil Ambani's Relance Infrastructure

Reliance Industries Ltd has signed a gas sales and purchase agreements with nine companies in the power sector for supply of natural gas to be produced from its KG-D6 block in the Krishna-Godavari basin. The GSPAs were for supply of about 11 million standard cubic metres (mmscmd) of natural gas at 11 different power generation facilities.

Reliance will supply the gas according to the formula approved by the government. The sale price, as fixed by the empowered group of ministers, will be $4.2 per million British thermal units (mbtu).

Interestingly, one of the buyers is the Anil Ambani-led Reliance Infrastructure. Anil is the younger brother of Mukesh Ambani, who controls RIL, even though the two are bitter business rivals.

The other units that signed the agreement are Gautami Power, Gujarat Paguthan Energy Corporation Pvt Ltd, GVK Industries-Phase I, GVK Industries Extension Phase II, Konaseema Gas Power, Lanco Kondapalli Power, Maharashtra State Power Generation Company, Torrent Power Ltd Sugen, Torrent Power Ltd Vatva, and Vemagiri Power Generation Co Ltd.

The highlights of the agreement, according to RIL, are: The duration of contract under the GSPA is five years; the gas price in GSPA is as per the formula approved by the government; and gas would be transported to the customers through the east-west pipeline of Reliance Gas Transportation Infrastructure Limited (RGTIL) and through pipelines of GAIL and GSPL. Accordingly, the power companies also signed gas transportation agreements RGTIL.

Speaking in Mumbai on the occasion, P M S Prasad, president and chief executive for petroleum, RIL, said, ''The expected supply of 18 mmscmd of gas to the power sector would largely eliminate the deficit in gas supply now being faced by these units, and would result in generation of approximately 4,000 mw of power.''

Prasad added that RIL may sign similar arrangements with other power firms. The company has already signed agreements with fertiliser firms for the supply of 14 mmscmd of gas.