RNRL ploy to earn profits by trading gas instead of using it for producing power

The intention of Anil Ambani owned Reliance Natural Resources limited is to use the gas produced by KGD-6 for trading purposes and not for producing power.
By: Alan Peter
 
May 12, 2007 - PRLog -- The intention of Anil Ambani owned Reliance Natural Resources limited is to use the gas produced by KGD-6 for trading purposes and not for producing power. This is evident from the fact that it has not mentioned either the quantity of gas required or by what date its power plants will be ready to use the same. The RNRL has also not indicated the time frame in which the power plants will be ready. It is even doubtful if the power plants will come into existence at all in foreseeable future.

As such by insisting that a particular quantity of gas be reserved for its use, the existing power and fertilizer plants which are working below capacity will be deprived of it. It may be mentioned that many of these plants are working below their capacity as there is great shortage of natural gas in the country. The order of restraint issued by Mumbai High Court under the circumstances is a retrograde step and not in the public interest.

It also should be noticed that RIL only recovers the expenses incurred by it in exploration and production of gas. The Government share of gas produced in KG-6 block goes up and would at some stage be as high as 85 per cent. The fact that gas belongs to the country appears to have been lost sight of completely by the High Court while granting the restraining order.

The RNRL, owned by Anil Ambani was not required to make any investment in exploration or development of the gas fields . The case made out by them is that they are entitled to make trading profit by sale of the gas supplied to it by RIL . This argument is disputed by RIL as it feels that to permit a private entity with a huge promoter holding to make profits at the cost of country as a whole is contrary to all tenets of public interest. The fact that RNRL has not indicated the quantity of gas that it would require now or in future for its power plants has also been noted by the Court. Reliance Patalganga Power Ltd has not progressed beyond drawing board stage.

To set up the power plant of capacity it proposes to do at Dadri will take several years while production of gas is expected to start from June, 2008. It is also in the interest of the country that gas production should start as soon as possible. The Court will also have to keep in mind that natural gas once produced technically can not be stored. The only option is to flare it. All the gas produced has to be transported through pipes. As such technically it is impossible to keep any part of it stored. More so it is not for the operator to deal with gas not produced as its rights vest with the Government. Under the circumstances it is felt that the order passed is in conflict with both contractual and technical issues.
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Source:Alan Peter
Email:Contact Author
Industry:Energy



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