R-ADAG objects to power plant in RIL-Haryana SEZ

Reviving memories of the bitter feud between the Ambani brothers, Anil Ambani's Reliance Dhirubhai Ambani Group (R-ADAG) has shot off a letter to elder brother Mukesh-promoted RIL and the Haryana government objecting to the proposed 2,000 MW power plant in their upcoming SEZ saying it violated the non-compete agreement between them.

Drawing attention to media reports quoting RIL chairman Mukesh Ambani announcing a 2,000 MW captive plant in the Rs 25,000 crore SEZ project in Haryana, Reliance Energy said that it was violative of the terms of agreement (reached between Anil and Mukesh on June 18, 2005) as ratified by the Bombay High Court.

The letter follows the signing of the joint venture agreement on Monday between RIL group company, Reliance Ventures, and Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) for the SEZ, which would also seek third party investment to the tune of Rs 1,00,000 crore.

When contacted, Reliance Energy officials confirmed the communication on the subject but declined to comment while sources close to Reliance Industries felt that there was no violation as anything that was incidental to a business was within their right.

HSIIDC managing director Rajeeve Arora, who was away, told PTI over the phone that he had not seen the letter but official sources said that whenever the issue came up, the same would be examined legally.

They, however, maintained that the agreement for the joint venture, in which HSIIDC is a 10% partner, was a reality and the SEZ will not be halted.

Sources familiar with the development said that REL has sought to raise a few issues on the non-compete agreement besides violation of the same.

One of the issues relate to non-disclosure of the particular terms of the non-compete agreement to the state government when signing the deal for SEZ, they said, adding that by itself this was another violation.

A copy of the communication has also been sent to Haryana Chief Minister Bhupinder Singh Hooda, sources said.

However, it is being pointed out that a captive power plant in the SEZ could not be a violation as the same has been done in Reliance Petroleum, a company floated for expansion of RIL's refinery in Jamnagar.

In the public offer document of Reliance Petroleum, which was listed earlier this year, a captive power plant has been proposed and a similar thing in other projects could not be a violation of the non-compete agreement.

Post-division of the Reliance empire, the two brothers had signed an agreement that provided for exclusivity of certain businesses for each side with another non-compete agreement providing for restraints.

As per the agreement, while Mukesh Ambani's group would have the exclusivity in the area of petroleum and petro-chemical business, Anil was given power, finance and telecom businesses on an exclusive basis.