Mukesh Ambani-controlled Reliance Industries (RIL) on Tuesday broke the ice with the Anil Ambani

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group by signing a gas sales purchase agreement (GSPA) with the group company Reliance Infrastructure. Natural gas from RIL’s D6 block in the Krishna Godvari (KG) basin would be supplied to the company’s power project in Andhra Pradesh.

Besides Reliance Infrastructure, RIL has signed GSPA for 10 other power projects including those owned by Gautami Power, GVK Industries, Lanco Kondapalli Power, Torrent Power, Gujarat Paguthan Energy, Vemagiri Power and Maharashtra State Power Generation Company.

RIL and the Anil Ambani-owned Reliance Natural Resources are locked in a legal battle for supply of gas from the D6 block. The signing of GSPA is likely to have no impact on the RNRL case, a senior RIL executive said. When asked for his reaction, Reliance Infrastructure chief executive officer Lalit Jalan did not comment.

The GSPAs were signed with nine customers in the power sector with the total gas to be supplied being approximately 11.0 million standard cubic metre per day (mmscmd) at 11 different power generation facilities.

The country’s biggest power generator NTPC, which is also fighting a court case with RIL over the gas issue in the Mumbai High Court, remains out of the list of power companies with whom RIL signed the GSPA. “We signed GSPA with those whose names figured in the list forwarded by the government,” said an RIL spokesperson. The company is expected to sign more agreements with other power companies.

PMS Prasad, president and chief executive officer, petroleum business, RIL, in a statement said, “We look forward to entering into agreements with other customers in this sector soon. The expected supply of 18 mmscmd gas to the power sector would largely eliminate the deficit in gas supply being faced by these units.” The supply of 18 mmscmd of natural gas to these units would result in generation of approximately 4,000 mw of power.

The agreements will be valid for five years with the base price fixed at $4.2 a million British thermal unit (mBtu). RIL's KG-D6 field off the coast of Andhra Pradesh started producing gas on April 1. “Gas to the customers would be transported through the east-west pipeline of Reliance Gas Transportation Infrastructure (RGTIL) and through pipelines of Gail and Gujarat State Petronet,” said an RIL statement. The power companies also signed gas transportation agreement (GTA) with RGTIL.