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Gail-Reliance in tussle over gas pipeline

Our Bureau

New Delhi , May 5

RELIANCE Industries Ltd (RIL) and Gail (India) Ltd are embroiled in a tussle over the ownership of gas transportation lines to evacuate RIL's gas find in the Krishna-Godavari basin to the consumption centres in north and west India.

There is also the issue of tariff. While Gail last week offered to evacuate gas at a tariff of 39 cents per million British thermal units (mmbtu), Reliance has offered to do it at a lower tariff.

Gail's offer is an offshoot of the larger debate of ownership of gas transportation highways. Gail has argued that it is best capable of setting up the highways since it would cater to the needs of all those companies that have discovered gas in the KG basin region. The discovered gas can be evacuated through a single pipeline thereby ensuring efficient use of capital and avoiding duplication of assets.

Addressing a press conference held on Wednesday, the Gail Chairman and Managing Director, Mr Prashanto Banerjee, said, "Discussions are under way with RIL and other companies engaged in exploration of gas in the Krishna-Godavari basin such as Oil and Natural Gas Corp, Gujarat State Petroleum Corp and Cairn Energy for laying the pipeline."

Reliance, on the other hand, has argued with the Government that the draft gas pipeline policy allows it to go ahead with its captive pipeline.

The pipeline in question will connect Kakinada in Andhra Pradesh to Uran, which is adjacent to Mumbai. It costs around Rs 6,725 crore and stretches 11 km, according to Gail. RIL has offered to lay the pipeline at 70 per cent of the cost set out by Gail.

"We are constantly endeavouring to bring down cost and all the figures may change," Mr Banerjee said at the conference.

RIL has a gas find of around 14.6 trillion cubic feet (tcf) in the KG basin. It plans to use around 3.5 tcf of this fuel to fire its proposed 3500 MW power plant in Dadri, Uttar Pradesh. It is hopeful of bagging the National Thermal Power Corporation (NTPC) tender to supply around 2.6 tcf of gas to power NTPC's proposed generation capacity in Kawas and Gandhar.

Gail is keen on laying the Uran-Kakinada pipeline for the additional reason that it would get access to markets in the regions adjacent to the areas traversed by the pipeline.

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