Mukesh Ambani controlled Reliance Industries Ltd (RIL) will reap handsome profits of anywhere between $1.8 and 2 billion every year from its gas sale business, even if it has to sell 35 per cent of its gas production to Anil Ambani’s Reliance Natural Resources Ltd (RNRL) under the pressure of court action. The Bombay High Court had directed RNRL to buy gas at $2.34 (Rs 112.32) a unit from RIL against the government determined price of $4.2 (Rs 202) per unit.
According to government sources, RIL’s actual cost of gas production from its D6 block in the Krishna Godavari (KG) basin is only 89 cents (Rs 42) per unit against its price realisation of $2.4 per unit from gas sale to RNRL and $4.2 per unit from sale to the power and fertiliser sectors.
Earlier, at the government-determined price of $4.2 per unit, RIL’s profits on the sale of 80 mmscmd (million metric standard cubic metre per day) of gas were anticipated at $2.4 billion. However, after Monday’s court verdict directing RIL to sell 28 mmscmd gas to RNRL at $2.4 per unit, RIL will still make upto $2 billion on the sale of 80 mmscmd of gas annually.
Even if the outcome of second court verdict in the RIL-National Thermal Power Corporation (NTPC) dispute goes in favour of NTPC and RIL has to sell another 12 mmscmd of gas to NTPC at $2.34 per unit, it will still be able to make a profit of $1.8 billion on the sale of 80 mmscmd of gas annually.
While the RIL spokesperson refused to comment, the production cost details sent by RIL for certification to Directorate General of Hydrocarbons (DGH) said, “We hereby submit the provisional estimates of post wellhead cost for the year 2009-10, which works out to be $0.8945 per mmbtu (million British thermal units) for the certification of the DGH.”