The Hindu Business Line : `Dadri project was a <I>fait accompli </I>for the finance committee of RIL'

CONTRARY to the perception in a section of the market, sources in Reliance Industries continue to insist that the Rs 10,000-crore Dadri power project was presented to the board as a fait accompli as it met on January 29 this year to discuss investment `opportunities' for the erstwhile BSES (as Reliance Energy was then known) in the power sector.

These sources told Business Line that discussions then were limited only to the prospects for larger investment opportunities in the power sector and not specifically to the 3,500-MW Uttar Pradesh power project that was announced by Mr Anil Ambani in Delhi, two days prior to the board meeting.

The RIL board then, had at its meeting, merely decided to allocate an aggregate funding of Rs 5,000 crore but the choice of projects and the terms on which these would be executed was to be cleared by the `finance committee' of the board.

While it is yet to clear any specific project or agree on the terms and conditions of investments, a series of announcements on the Dadri project only served to render deliberations of the `finance committee' irrelevant, these sources contend.

They point out that on January 27, 2004 it was publicly announced that the Reliance group would be setting up "the world's largest gas-based power project with an investment outlay of more than Rs 10,000 crore." Addressing the media in New Delhi, Mr Anil Ambani, REL Chairman, then said that the project would produce power at around Rs 2 per unit and would have as feedstock, gas from Reliance's gas fields in Krishna-Godavari.

Further, the Uttar Pradesh Chief Minister, Mr Mulayam Singh Yadav, said then, "Today's announcement by Reliance, India's largest business enterprise, is a strong vote of confidence in the state of Uttar Pradesh."

These sources view such a claim as a further pointer to the perception that was being created in the public mind that Reliance Industries is already committed to supporting a specific project, when the reality is that it would be a good two days hence that the RIL board itself would meet and that too decide only on an investment support to power projects in general — the choice of projects themselves being left to the finance committee of the board.

These sources further contend that even if one assumes for the sake of argument that investment in the `Dadri' project was, in fact, cleared by the RIL board at its January 29 meeting, it is strange that the Reliance Energy Ltd's Web site should refer on January 28 itself by way of a bulletin under the heading, "Ambani's gas to fuel Mulayam's power."

Reliance Energy could not have been privy to what the principal shareholder's (RIL) board would decide on a major investment project a day hence, these sources point out.