Reliance firms reach gas pact

Move clears way for Dadri, Patalganga projects.

Reliance Industries Ltd and Reliance Natural Resources Ltd have hammered out a gas supply agreement.

Reliance Natural Resources is one of the entities that have come into existence following a split of the Reliance business empire between Ambani brothers Mukesh and Anil.

It will be listed on the Bombay Stock Exchange and the National Stock Exchange and will be a part of the Anil Dhirubhai Ambani Enterprises (ADAE) group.

According to a draft information memorandum filed by Reliance Natural Resources with the stock exchanges, the company signed the "gas supply master agreement" with Reliance Industries on January 12.

The agreement sets the basis for determining quantities of gas to be made available by Reliance Industries to Reliance Natural Resources, its pricing and terms and conditions.

Reliance Industries proposes to use a part of its gas discoveries for power generation of ADAE's Reliance Energy Ltd and Reliance Patalganga Power Ltd. Reliance Natural Resources, the gas-based energy undertaking of Reliance Industries, will be the vehicle for supply of gas to Reliance Energy and Patalganga.

According to the agreement, Reliance Natural Resources can buy gas up to 28 MMSCMD (million standard cubic meters per day) from Reliance Industries. The terms and conditions for supplying the gas are similar to those of Reliance's agreement with NTPC for supply of 12 MMSCMD of gas.

Reliance Industries insiders said with the arrangements in place, both Patalgana and Dadri projects would be competitive.

"Reliance Industries had committed in December 2004 that it would take care of the gas requirement of the power the projects. Its chairman, Mukesh Ambani, kept his promise with this agreement," Reliance insiders said. A supply of 28 MMSCMD could feed 8,000-Mw power plants, sources said.

Sources close to the ADAE did not comment when Business Standard contacted them late in the evening. Priced at $3.18 MMBTU (million British thermal unit), Reliance Industries will supply the gas from its production blocks in India, including the Krishna-Godavari Basin.