RIL may stop gas supply to R-Infra

RIL may stop gas supply to R-Infra

New Delhi: Reliance Industries Ltd (RIL) has issued a notice to suspend gas supplies to Reliance Infrastructure Ltd (R-Infra) for defaulting on payments.

Issued on 22 September, the notice is for gas supplies from the D6 field of the Krishna-Godavari (KG) basin to R-Infra’s power plant in Andhra Pradesh, RIL said in an emailed statement on Thursday.

R-Infra is paying the government-approved price of $4.2 (Rs202) per million British thermal units, the company said in a 24 September letter to RIL that was made available to Bloomberg. The company is not paying marketing margins, which is illegal and unauthorized, according to the letter.

Anil Ambani, chairman, R-Infra, wants to enforce a 2005 agreement requiring RIL to supply natural gas from the KG-D6 field in the Bay of Bengal to a plant in Uttar Pradesh at 44% cheaper than a government-approved price.

RIL and Reliance Natural Resources Ltd (RNRL), another Anil Ambani-owned firm, are fighting a lawsuit that has reached the Supreme Court. The court is scheduled to start final hearings in the four-year-old row from 20 October.

RIL was little changed at Rs2,100.95 in Mumbai trading on Thursday compared with a 0.1% decline in R-Infra. The benchmark Sensex index of the Bombay Stock Exchange gained 0.37%.

RIL, run by India’s richest billionaire Mukesh Ambani, signed an agreement with R-Infra for supply of gas to a plant in Andhra Pradesh on 28 April.

India designated fuel-starved power producers and fertilizer-makers as priority customers for the gas to be produced from RIL’s KG field, which is expected to more than double the country’s output of the fuel.

Production, which started in April, may double the nation’s supply of the fuel when its reaches a peak rate of 80 million cu. m a day, according to oil secretary R.S. Pandey.

Mint’s Bhuma Shrivastava in Mumbai contributed to this story.