Mukesh proposes to undertake piped gas network in AP

Reliance Industries chairman and managing director Mukesh Ambani today proposed to develop piped gas network on common carrier principle across Andhra Pradesh and offered to give priority to the state in supply once the production in Reliance gas fields in the K-G basin begins.

Mukesh met chief minister Y S Rajasekhara Reddy on Tuesday to discuss the issues involved in the supply of natural gas in view of Reliance's plans to commence gas production in the K-G basin from mid-2008.

In an hour-long meeting with the chief minister, the head of Reliance Industries was learnt to have responded positively to several of the suggestions made by Reddy on the issues of pricing and supply of natural gas in the state.

The meeting assumes significance in the backdrop of the state government's efforts to gain control over the future gas production in the K-G basin by way of a unified state gas grid proposed to be developed by it in joint venture with both the public and private sector companies.

Reliance has already proposed to lay a separate pipeline from the port town of Kakinada to Dahej to evacuate gas from the K-B basin. Mukesh also sought the state government's support in terms of land allocation and sales tax incentives among other things, officials said.

On the Reliance's proposal to develop gas grid and supply network in the state on its own, the chief minister put a precondition that the company should complete the entire process of grid in Andhra and supply gas to at least 10 cities/ towns by July 2008, the first phase of the project, an official press release said.

It is not immediately known whether the state government has decided to modify its present gas grid plan in the wake of Reliance's latest proposal. "All these issues will take some time to crystallise," an official told Business Standard.

Reddy also suggested to Mukesh to supply gas to domestic consumers at half the existing LPG price besides entering into a long-term price agreement to ensure that the price would remain unchanged for up to 20 years. The chief minister also suggested that Andhra Pradesh be given top priority in terms of supply of gas from the K-G basin's Reliance offshore gas fields.

Though he was more than willing to agree to the suggestion on lower pricing and supply of gas to Andhra Pradesh on priority basis, Mukesh is said to have told the chief minister that the price agreement beyond seven to eight years was not a viable proposition, sources said.

Apart from gas, Mukesh also agreed to the proposal of the chief minister to develop demonstration fields for biodiesel and other crops to propagate effective farm practices among other things.

The chief minister also suggested to him to enter into a joint venture arrangement with the Andhra Pradesh Forest Development Corporation for raising biodiesel plantations, the press release stated.

He also agreed to develop procurement and cold storage chains in the state to connect farmers with global consumers to ensure better prices for their produce.