Reliance Industries may sell K-G gas to Maharashtra

Energy-starved Maharashtra is eyeing Reliance Industries' gas from the Krishna-Godavari basin for the Dabhol and Uran power plants. Both the plants are running way below their capacities.

"Reliance floated a tender for their gas from the K-G basin and we bid for the tender," Maharashtra's Energy Minister Dilip Walse-Patil told Business Standard. However, whether this gas will be made available to Maharashtra, or for that matter to any other consumer, once production commence, is contentious.

An interim order by the Bombay High Court last week prevents Reliance from selling K-G gas to any other customer other than Reliance Natural Resources Ltd (to which 28 mscmd was committed) and NTPC (to which 12 mscmd was committed) before fulfilling its commitments. Reliance will start production with 20 mscmd in June 2008, which will be scaled up to 80 mscmd by mid-2009.If the high court upholds the same judgement in its next hearing in June, Reliance will have to change its output plan.

An official in the Maharashtra government said some of Reliance's gas may go to the Dabhol plant as well.

The current power shortfall in Maharashtra is 3,800 Mw. In April, the shortfall was over 6,000 Mw. Currently, the state gets around 10,000 Mw of power from various sources. It hopes to add another 2,600 Mw in the next 10 months.

Reliance, which discovered 11.2 trillion cubic feet (tcf) gas in the K-G basin, has floated tenders across the country for discovering the price of the gas.

A Reliance official said that the price of the gas, which was to be linked to the price of the Japanese crude cocktail, would be around Rs 4.50 per million British thermal unit (mBtu) at the landfall point.

Prime Minister Manmohan Singh, in a meeting with Maharashtra Chief Minister Vilasrao Deshmukh on Friday, assured Maharashtra supply of 5.4 mscmd of gas from Reliance's K-G basin once the pipeline from Kakinada to Bharuch is completed. This gas would go into increasing the capacity of the Uran power plant to 1,040 Mw.

The plant currently generates about 400 Mw. Once GAIL's gas pipeline from Dahej to Uran is commissioned in June the plant is expected to start producing 250 Mw additional power.