As a major stakeholder in the KG basin gas, the government is expected to intervene in the RIL vs RNRL case as the as the Bombay High Court (BHC) order has led to a fix on its gas utilization. The government is expected to earn nearly $9 billion from RIL as part of its profit share.
The government has put in place RIL price of $4.2 per unit as per a directive by the empowered group of ministers (eGoM), where the first priority was given to the for fertiliser companies, followed by power plants with idle capacity due to lack of gas. After the BHC in favor of RNRL is likely to deteriorate government’s allocation policy as it was based on RIL’s first set of consumers.
The BHC order has asked RIL to sell gas to RNRL, which will be channelized to its affiliate, Reliance Power. As of now, R Power has no captive gas-based power plant; and hence the company stands benefited by the order.
This apart, RIL has to supply 28 mmscmd to RNRL as per court order, then it will be left with a little gas from its first block of 40 mmscmd gas for existing fertiliser and power plants.