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Gas deal may steal the show at Reliance AGM

June 15, 2010 11:46 IST

Reliance Industries' annual general meeting on Friday will be unique in many ways. It's the first AGM after the Supreme Court judgment on K-G gas, the first after the truce between Mukesh and Anil Ambani and the first after the company's big-bang return to telecom.
Reliance Industries' chairman, Mukesh Ambani, is likely to take this feel-good factor a step forward by telling his shareholders the broad drift of the new gas sales and purchase agreement his company and Anil's Reliance Natural Resources are working on.

The SC-mandated deadline for the talks to begin between the two brothers ends on June 21, six weeks from the day the court gave its verdict.

After that, they have eight more weeks to conclude the negotiations. Ambani senior wants to inform his shareholders that his brother and he are working overtime to meet that deadline.
Since the judgment, there have been significant developments which have triggered a paradigm shift in the way the two groups function. Within two weeks of the court order, both Mukesh and Anil agreed on a truce, on May 24, doing away with most of the non-compete and right of first refusal agreements, and unleashed an era of partnerships and potential collaborations.
Telecom is already emerging as the first test case of that collaborative endeavour.

However, the one that started it all and split policy makers and legal beavers alike, the contentious GSPA between RIL and RNRL, is seen as the most critical, that can really bring the two sides together.
Which explains the genuine effort to wrap up the exercise by June 18, though there is still some time for the window to close.

Which is why, just like telecom, the responsibility of taking the talks forward within the deadline has been given to the two seniormost executives and trusted lieutenants from the two sides - Manoj Modi and Satish Seth.

"Both are like group managing directors from the two sides, who can quickly take critical calls," said one of the bankers. Modi and Seth are assisted by the respective business CEOs, P M S Prasad from RIL and J P Chalasani from RPower, and their legal teams. 
The revised GSPA, however, will take some more time, as the new quantities, pricing and even timeline needs government approval. Petroleum Ministry sources say that as on date, there is no meeting fixed for the empowered group of minister's.

Government officials note the two sides need to finalise the GSPA first; only then, can the government give it a green signal.
RIL is producing 60 mscmd of gas from the KG-D6 basin, which has been allocated according to the gas utilisation policy.

The plan is to ramp up production to 80 mscmd. GSPAs have been executed with about 50 customers in line with the policy for 69 mscmd. Ministry officials add there are at least 200 applications still pending from various power companies, with projects at various stages of implementation.
There are also efforts to widen the ambit of the gas allocation policy to accommodate new projects. That will be most beneficial to RNRL and its gas-based power projects.

Sources say, right after the judgment, Mukesh Ambani himself discussed this issue with senior officials from the Prime Minister's Office.

In fact, Reliance watchers will even go to the extent to say that this was the first visible gesture of a rapprochement.