RIL to supply KG gas to Mahagenco

The state-owned Maharashtra Power Generation Company (Mahagenco) is close to signing a two-year contract with Reliance Industries (RIL) to procure gas from the latter's Krishna-Godavari (KG) basin.

Sources in the state government's energy department said the deal would enable Mahagenco to get 1 million standard cubic meter per day (mmscd) gas at the price of $ 4.34 per million metric British thermal unit (mmbtu).

Gas from the K-G basin is expected to reach Mahagesco plant in Uran from July 2008 onwards. This will ramp up Mahagenco's Uran plant's capacity by 250 mw.

It is expected that RIL's gas pipeline between Kakinada and Uran will be completed by May and the gas will be available at around $5 mmbtu, the sources added.

An RIL spokesperson said the company was in talks with many players to supply gas. "However, nothing has been finalised," he added.

Mahagenco was one of the 30-odd entities which had participated in the price discovery mechanism initiated by RIL.

The Uran plant of Mahagenco has an installed capacity of 850 mw and is running at 350 to 400 mw due to non-availability of gas. Once enough gas is available, Mahagenco will able to ramp up capacity by another 250 mw.

Meanwhile, Mahagenco is also trying to source the gas from either Gas Authority of India (GAIL) or Petronet LNG for its Uran plant as the state is reeling under power shortage. However, this arrangement is going to be temporary till the RIL gas arrives, the sources noted.

The gas pricing has become a contentious issue between Mukesh Ambani's RIL and his brother Anil Ambani's Reliance Natural Resources (RNRL).The Bombay High Court directed in October that both the parties should resolve the issue amicably within four months.

As per the Empowered Group of Minister's guidelines on the K-G basin gas issued earlier this year, RIL has to supply the gas at $ 4.20 to fertilizer and power companies.