Mukesh Ambani-led Reliance Industries Ltd (RIL) says it has suffered a $400 million (Rs 1,960 crore) revenue loss since May this year and continues to take a hit of $100 million (Rs 490 crore) per month by keeping the gas production from its D6 gas block in the Krishna-Godavari basin lower than its potential.
RIL needs government approval to sell its gas. The company, whose fortunes are tied to the government’s gas use policy, currently has the potential to produce over 60 million standard cubic meters of gas per day (mmscmd) from its KG-D6 gas block but is producing 36 mmscmd. Government has allocated 40 mmscmd to key sectors like power, fertilisers and steel.
“We have been suffering a lack of demand since May and at present, we are producing 60 per cent of what we can produce from the block,” RIL’s executive director P.M.S. Prasad, who was recently appointed to the company’s board, told Hindustan Times.
Analysts say that the government may be dragging its feet on account of RIL’s court dispute with Anil Ambani’s Reliance Reliance Natural Resources Ltd and public sector NTPC over the supply of 40 mmscmd of gas.
Prasad said the interest burden was mounting. “We had a certain schedule for repayment of debt, which will now get deferred and we will have to pay $17-18 million per month higher as interest cost,” he said.
RIL’s internal target is to reach 80 mmscmd by December, but it could stretch to March or beyond on account of uncertainties, he said.
Reliance Industries claims that it already has 25 to 30 customers from that are ready to buy up to 82 mmscmd gas. It also has an internal demand for 17 mmscmd.