RIL threatens to cut gas supply for Anil Ambani plant

The dispute between the Ambani brothers over natural gas has taken yet another turn, as Reliance Industries Ltd has put Reliance Infrastructure, an Anil Ambani company, on notice that it would cut gas supply to the latter's 220 MW power plant at Samalkot in Andhra Pradesh, claiming non-payment of dues for the first fortnight of September.

Reliance Infrastructure Ltd operates the plant in the East Godavari region. It requires 1.1 mscmd of gas, of which RIL was supplying 0.52 mscmd on a fall-back basis in August though the agreement was for 0.19 mscmd at a price of $4.2 per million British thermal unit. The two companies had signed a Gas Sale and Purchase Agreement (GSPA) on April 27 after an empowered group of ministers allocated the Andhra plant gas supplies.

Earlier this month, RI wrote to RIL stating that it would not pay any marketing margins on the gas since the charge was illegal and unwarranted, because it was not a result of any marketing undertaken by RIL or any other agency. RIL had claimed $0.135 per million British thermal unit as marketing margin from RI over and above the base price of $4.2 a unit.

RelInfra had so far been paying RIL the marketing margins but now says the margin is illegal since it does not have government approval.

An RIL spokesman said the company's notice, issued on September 22, "has been issued in accordance with the terms of the gas sale and purchase agreement executed between RIL and RelInfra''.

''The notice has been issued due to default committed by Reliance Infrastructure in payment of the amounts due, under the invoice for gas supplied during the first fortnight of September 2009,'' said RIL.