Gail may get to market Reliance KG basin gas

The government-owned Gail (India), the largest gas transmission company in the country, may get exclusive marketing rights for the distribution of the natural gas produced by Reliance Industries (RIL) from its D-6 block in the Krishna-Godavari (KG) basin. The government may request the Bombay High Court to appoint Gail as the nominee for distributing the gas to fuel-starved fertiliser and power units. If the court allows, Gail would be asked to sell the gas as per the government-approved utilisation policy and pricing that is $4.20 per million British thermal unit (mmBtu) at the land-fall, an official close to the development, who requested anonymity, said. The land-fall point for KG gas is at Kakinada (Andhra Pradesh). The court had said on Monday that it could modify the injunction that prevents RIL from selling gas to third parties other than Reliance Natural Resources (RNRL). “The gas (produced by RIL at D-6 block in KG basin) is a national asset. No individual or company can hold the country to ransom, especially at a time when many fertiliser and power plants are on the verge of closure due to fuel shortage. The government has said the gas price of $4.20 per mmBtu at Kakinada will be uniformly applicable to all users. In addition, buyers will have to pay the transmission cost and local taxes,� he said. The government hopes that as an interim measure, the court may vacate the injunction that prohibits RIL from selling the gas. “RIL is expected to start gas production from this month and some members in the empowered group of ministers (EGoM) feel the dispute between the contractor (RIL) and disputed buyers (NTPC and RNRL) shouldn’t stop production and use of the national asset,� he said. The EGoM is headed by external affairs minister Pranab Mukherjee. Other members of the group include home minister P Chidambaram , law minister HR Bharadwaj, oil minister Murli Deora, power minister Sushilkumar Shinde, steel minister Ram Vilas Paswan and corporate affairs minister Prem Chand Gupta. Another official, who didn’t wish to be identified, said the government had held a meeting in this regard with Gail and RIL officials one-and-a-half months ago. “RIL had expressed its reservation on the proposal as this would reduce the company as a mere service provider. However, it had admitted that the government had sovereign rights over the asset,� he said. RIL is engaged in two separate legal battles, one with NTPC where it had won a tender for supplying 12 million standard cubic meters (MMSCMD) of gas at $2.34 per mmBtu to the power major. In the other case, Anil Dhirubhai Ambani group company RNRL claims 28 MMSCMD gas from RIL’s D6 field for its proposed Dadri power plant as per a family settlement between the two Ambani brothers. RIL is promoted by Mukesh Ambani.