Rel to lay Rs 16,000 cr gas pipeline

New Delhi: Anil Ambani Group’s Reliance Fuel Resources Ltd (RFRL) has approached the Government for seeking permission to lay a Rs 16,000 crore gas pipeline.

The propsed pipeline project would take natural gas from Reliance Industries-operated field off the Andhra coast to its power plant at Dadri in Uttar Pradesh.

RFRL wrote to the Petroleum Secretary on June 5 for permission to lay a pipeline from Kakinada to Dadri, an industry official said.

The pipeline from Kakinada, the landfall point of the gas from KG-D6 block of RIL in Krishna Godavari basin, will pass through Hyderabad and onwards to Nagpur, Bhopal, Delhi and finally reach Dadri, where an Anil Ambani Group firm is setting up a 5,600 MW power project.

Anil Ambani Group had last year approached state-owned gas utility Gas Authority of India Ltd (GAIL) for transporting gas to its power plant.

GAIL had offered to transport gas from KG Basin to Dadri by using a part of the existing Hazira-Vijaipur-Jagdishpur (HVJ) network.

Under the new scheme, the Anil Ambani Group - which is to get at least 28 million standard cubic meters per day of gas from RIL field for its power plant - is also planning to set up city gas distribution (CGD) network in cities falling on the pipeline route, especially Delhi, to supply gas for domestic and commercial use and to automobiles (CNG).

RFRL would lay the pipeline in two years from the date of receiving permission an the gas would also be used for additional power plants.

However, the Government is yet to approve the price at which RIL had agreed to sell gas to RFRL, the company officials said.

RIL would supply the gas to RFRL at $2.34 per million British thermal unit (mBtu).

The offered price was considered too low by a section in the establishment as it was quoted almost half of current market price.

Mukesh Ambani-managed Reliance Industries plans to produce 40 million standard cubic meters per day of gas from its KG-D6 block, off the Andhra coast from mid-2008.

While RIL had approached the Petroleum Ministry for a nod of approval for the price, RFRL questioned the ministry's right to approve the price at which a producer (in this case RIL) sells gas to customers (RFRL).

Company officials said the Government’s nod was needed only for the formula or fixing the basis of pricing of gas for computing the Government's share in the spoils.

Petroleum Ministry is examining the price offered by RIL and is yet to take a view, the officials said.