Following a favourable decision from the Bombay High Court on Friday, Reliance Industries has initiated talks with leading power and fertiliser firms to sell its Krishna Godavari (KG) basin  gas.

While delivering the order,  the court ruled, ''RIL shall be at liberty to sell or dispose of the natural gas…to such parties as may be directed by the government.''

The list of buyers will be drawn up by RIL in consultation with the government next week.

According to industry sources the power firms that have evinced interest in gas from Reliance are Ratnagiri Gas and Power (RGPPL), GVK Power and Infrastructure, Gautami Power, Konaseema and Torrent Power while the fertiliser firms that are Rashtriya Chemicals and Fertilisers (RCF), Kribhco, Iffco, Nagarjuna Fertilisers, Chambal Fertilisers and Tata Chemicals.

Production at the hydrocarbon-rich KG basin is expected to begin later this month according. RIL plans to achieve 40 mmscmd by end 2009, it will be doubled to 80 mmscmd by end Dec2010.

About 70 per cent of the gas will be earmarked for the power and fertiliser sectors. This will give a major boost to power and fertiliser sectors. On full capacity utilization power generation is expected to surge by 8000mw and urea output will increase by 10 million tonne per annum (mmtpa).

About 70 per cent of the available gas is in the country is consumed by the power and fertiliser units; due to inadequate supply these units are forced to operate at 50 to 60 per cent of installed capacity.

Meanwhile, the country's biggest gas marketing company, Gail is expected to lift around 25 per cent of the total 40 mmscmd gas to be produced this year from the KG-D6 block of RIL. A MoU to the effect has already been signed and a firm agreement is expected to follow soon.

According to industry sources, Gail has already proposals for supply of gas to them including the KG-D6. With the easing of naptha prices, the Department of Fertilisers is also has looking at viability of switching to naptha from natural gas they add.

Once the KG basin output crosses 40 mmscmd, the demand from petrochemical units, refinery and steel sectors as also downstream RIL units will be taken up.