`RIL using power cos to fight its gas battle`

RNRL on Sunday hit out at power companies GMR and GVK for raising the bogey of unfair price advantage.

Updated: Jul 20, 2009, 00:25 AM IST

New Delhi: Anil Ambani group firm RNRL
on Sunday hit out at power companies GMR and GVK for raising the
bogey of unfair price advantage to it, saying that they had
got into gas deals with Mukesh Ambani-led RIL knowing that the
agreement was subject to the outcome of the RNRL-RIL case.

Commenting on reports that GMR Group, Torrent Power and
GVK Industries had approached the government complaining that
unfair price advantage to the ADAG firm will kill competition,
RNRL counsel Mahesh Agarwal said, "They are citing the RIL
battle or in other words, RIL is using them to fight its own

Reliance Industries Ltd and Reliance Natural Resources
have Ltd filed cross-appeals in the Supreme Court challenging
the Bombay High Court decision and the apex court will hear
the case tomorrow.

The power companies had voiced concerns that gas supply
from RIL`s KG-D6 fields would be impacted if the fuel is to be
diverted to RNRL at lower rates.

"GMR and GVK signed agreements with RIL based on the
Bombay High Court order and that provides that gas supply is
subject to the outcome of the RNRL-RIL case," Agarwal said.

He said that the Ministry of Petroleum had suggested to
the High Court that pending the dispute, gas could be supplied
to others and the same was accepted.

Terming the power companies` stance "malafide", Agarwal
said they had got into the gas supply deal with RIL knowing
the High Court decision and now they are crying.

He said that RNRL had got into an agreement with RIL to
get the gas at USD 2.34 per mmBtu for 17 years at an
arms-length agreement whereas power companies signed the deal
for five years which was not at arms-length as the gas was for
their stranded projects.

GMR Group, Torrent Power and GVK Industries have written
separately to Petroleum Minister Murli Deora and Power
Secretary HS Brahma, stating that the move would give unfair
price advantage to ADAG and kill competition in the power

"The price indicated in the order would benefit specific
power generators (like those of Anil Ambani Group) and thereby
making power generated by others non-competitive," Torrent
Power said, adding "such an environment would discourage
further investment by multiple players in the power sector".

GVK vice-chairman GV Sanjay Reddy said, "(The judgment)
is in favour of one particular group which has been given
inexplicable advantage to load the electricity market against
all competition."

"Such large quantities of gas supplied to a single entity
will not leave scope for any other player in the field to
sustain and survive," said BVN Rao, Business Chairman -
Energy, GMR Group.

Bureau Report