RIL puts ADAG firm on notice for default on gas payment

Reliance Industries today said it has issued notice to suspend gas supply to Reliance Infra for "default" -- within days of Anil Ambani group entity saying it would not pay "illegal" marketing margins to Mukesh-led firm.

Reliance Industries today said it has issued notice to suspend gas supply to Reliance Infra for "default" -- within days of Anil Ambani group entity saying it would not pay "illegal" marketing margins to Mukesh-led firm.

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"The notice has been issued due to default committed by Reliance Infrastructure Ltd in payment of the amounts due to RIL under the invoice for gas supply during the first fortnight of September 2009," an RIL spokesperson said today.

Reliance Infra has been getting the gas from RIL for its power plant in Andhra Pradesh for last five months at a price of USD 4.2 per mmBtu and marketing margin of 0.13 per mmBtu.

The Anil Ambani group, fighting a legal battle for securing 28 mmscmd gas for Reliance Natural Resources (RNRL) from RIL at a price of USD 2.34 per mmBtu under a family settlement, had last week questioned the marketing margin and had informed RIL that it would not pay the same.

"On September 22, 2009, RIL has issued a notice to Reliance Infra for suspension of supply of gas to its power plant in East Godavari, Andhra Pradesh... The notice has been issued in accordance with the terms of Gas Sale and Purchase Agreement (GSPA)," RIL spokesperson said.

Earlier in its letter, Reliance Infra had told RIL that their gas supply agreement was not a result of any marketing undertaken by RIL or any agency and "since there has been a complete absence of any marketing, the charge in respect of marketing margin is clearly unwarranted."