ADAG unit may get gas 6 months before start-up

The government may allocate natural gas to Anil Ambani Group's proposed power plants like the Dadri project only six months prior to commissioning, as reservation of gas is not allowed under the present policy.

"The Gas Utilisation Policy is very clear -- the gas, which is a precious asset, cannot be reserved for anyone," a top government official said.

"So, for anyone wanting natural gas for their plants, be it in fertiliser, power or any other sector, the allocation is to be made (to them) closer to the time when they can actually consume that gas," he said.

Incidentally, Reliance Industries Limited's chairman Mukesh Ambani last week told company shareholders that his firm will supply gas to ADAG plants as and when they are ready and it is subject to the allocation being made by the government.

"The allocations till now have been made on a non-discriminatory principal. We had not tried to give preference to any unit or company over others," the official said.

ADAG's Dadri plant near here is two-and-half years away from beginning operations, while any expansion of its Samalkot plant in Andhra Pradesh too may not happen before the second half of 2012.

A new unit that ADAG may set up by either relocating Dadri or as a greenfield project in states like Andhra Pradesh and Maharashtra, may also take 24-36 months to commission.

The Uttar Pradesh government had in January started taking repossesion of land given to Reliance Power in Dadri, following a December 2009 order of the Allahabad high court that quashed the land acquisition in 2004 by the then state government headed by Mulayam Singh Yadav.

Reliance Power shares closed at Rs 171.05 on the Bombay Stock Exchange, compared to its issue price of Rs 450 in February 2008 that made it the largest public offer of the day in the country.

The Anil Ambani group company last week commissioned only its second 300-MW unit of the Rosa thermal power project in Uttar Pradesh since its inception. The first unit was brought on stream in December 2009.

"It will not be wise on the government's part to deny gas to a unit that is commissioning in 2010 or 2011 as it wants to allocate the gas to some other units that will come up in the future," he said.

An empowered group of ministers headed by Finance Minister Pranab Mukherjee, had on October 27, 2009, allocated gas to power plants, petrochemical units and refineries that said they would be ready to consume fuel by February/March.

All the plants that would be commissioned or would begin usage of gas after April 2010 were to be considered later.

About 12,000 MW of gas-based power plants are in various stages of implementations and fuel would be allocated to them as and when they are ready.

After the Supreme Court last month ruled that government alone had the right to approve the price of the gas produced from fields such as KG-D6 of Reliance Industries and fix its users, ADAG informally approached the oil ministry for approving allocation of gas to its proposed plants, including the 7,800 MW unit at Dadri in Uttar Pradesh.

The official said plants like those of ADAG would be considered for allocation of KG-D6 gas subject to availability i.e. surplus production over and above what has been already allocated.

Gas produced by Gujarat State Petroleum Corp and Oil and Natural Gas Corporation too would be considered for giving to firms like ADAG.

The government has till now allocated about 64 million standard cubic meters per day of KG-D6 output on a firm basis to three dozen units.

RIL is currently producing around 60 mmscmd of gas which it hopes to continue for the next 4-6 months.

Peak approved output from KG-D6 is 80 mmscmd.