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Reliance gas to help IGL cut costs

business Updated: Aug 13, 2009 22:38 IST
HT Correspondent

Mukesh Ambani controlled Reliance Industries Ltd (RIL) signed its first agreement for sale of gas for city gas distribution with Indraprastha Gas Ltd (IGL), the sole supplier of CNG (compressed natural gas) for transportation and PNG (piped natural gas) to households.

Under the agreement, RIL agreed to supply 0.308 million standard cubic meters of gas (mmscmd) to IGL. “The quantum of gas from RIL to IGL will go up to 2.1 mmscmd in the next five years,” IGL managing director Rajesh Vedvyas said.

Sold on the government approved price of $4.20 (about Rs 200) per unit, the delivered price of this RIL gas (including the transportation charges and taxes) will come to $6.80 (about Rs 325) per unit, Vedvyas said.

RIL’s gas will replace the costly R-LNG (regassified LNG) being currently procured by IGL at $7.25 (about Rs 350) per unit, Vedvyas said.

IGL said the commencement of gas supply from RIL — being produced by it from its D6 gas block in the Krishna Godavari basin — will help in meeting the ever increasing demand of CNG in the capital. Presently, 300,000 (3 lakh) vehicles are plying on CNG and private CNG vehicles are growing at the rate of 45-50 per cent per annum, said Manmohan Singh, director (commercial), IGL.

On the PNG supply side, Singh said IGL expects the present 150,000 (1.5 lakh) PNG connections in the city to grow to 500,000 (5 lakh) in the next five years.