RIL issues notice to Reliance Infra to pay dues for supplies to its Andhra power plant.
The Ambani brothers have opened yet another front in their dispute over gas supplies from the Krishna-Godavari basin, with Mukesh Ambani-owned Reliance Industries Ltd (RIL) issuing a notice to a power plant run by Anil Ambani-owned Reliance Infrastructure, threatening to stop gas supplies for non-payment of dues for the first fortnight of September.
Reliance Infrastructure (RelInfra) Ltd operates the 220 Mw Samalkot power plant in the East Godavari region . The plant requires 1.1 million standard cubic metre a day (mscmd) of gas of which RIL was supplying 0.52 mscmd on a fall-back basis in August though the agreement was for 0.19 mscmd at a price of $4.2 per million British thermal unit.
The two companies had signed a Gas Sale and Purchase Agreement (GSPA) on April 27 after an empowered group of ministers allocated the Andhra plant gas supplies.
Earlier this month, RelInfra wrote to RIL stating that it would not pay any marketing margins on the gas since the charge was illegal and unwarranted because it was not a result of any marketing undertaken by RIL or any other agency. RIL had claimed $0.135 per million British thermal unit as marketing margin from RelInfra over and above the base price of $4.2 a unit.
RelInfra had so far been paying RIL the marketing margins but now says the margin is illegal since it does not have government approval.
The two groups are already locked in an intense legal dispute over supply of gas from RIL’s D6 field in the Krishna Godavari basin at a price of $2.34 per mBtu for Anil Ambani's impending plant at Dadri in Uttar Pradesh.
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An RIL spokesman said the company's notice, issued on September 22, "has been issued in accordance with the terms of the Gas Sale and Purchase Agreement executed between RIL and RelInfra”.
In response to RIL's notice, RelInfra said the marketing margin was in contempt of a Bombay High Court order of January 31, 2009, and was also in violation of a production sharing contract and a government executive order that approved the price. It said the court had permitted RIL to sell gas as an interim measure at a price of $4.2 a unit. “We are making due payment of the sale consideration ie $4.2 per million Btu for supply of gas under the GSPA. We are not liable to make payment of any illegal and unauthorised charge,” said the RelInfra letter sent to RIL today.
The government has so far maintained that it has not fixed or approved the amount of marketing margin on natural gas sales by any contractor and the issue should be discussed by the buyer and the seller as part of GSPA.