Anil Ambani's mega power plans run out of fuel: CNBC-TV18 report

28 July 2006

Anil Ambani''s mega power dreams have run out of fuel, says CNBC-TV18 ! The government''s decision to reject the RIL-RNRL gas deal has come as a big blow for the company''s ambitious Dadri power plants. But government sources say that it is not the only reason for the delay of the Dadri plant, reports CNBC-TV18.

The first phase of 5700 MW was to have started in 2007. But essential project contracts are yet to be awarded. Erection Procurement Construction or EPC contracts, which is an agreement between the company and the contractor to buy equipment at a particular price haven''t been awarded yet.

Tenders for this were floated last year by REL, but company sources say that Reliance Energy is not prepared to open the bids. Besides EPC contracts, crucial power purchase agreements are also not in place, though Reliance Energy has received letters of intent from a few states.

But Reliance Energy sources say that the biggest bone of contention is the government''s unilateral decision to reject the gas price especially since Reliance Industries has indicated its acceptance of $3.80 as the price. They also argue that the RIL-NTPC gas deal too is based on similar conditions.

But oil ministry officials say that the RIL-NTPC gas deal is in court and hasn''t come to them for approval. They also say that NTPC is currently buying gas at as much as $5 per unit. And therefore there is no reason why Reliance Natural Resources Limited can''t pay more.

But putting all quibbles aside, kick-starting Dadri would hinge on whether Reliance Energy can pay a price above USD 4 per unit.