Sat, 03 Jul 2010 14:59:55 GMT

RNRL to merge with R-Power

Mumbai: The Anil Dhirubhai Ambani Group (ADAG) has decided to merge Reliance Natural Resources Ltd (RNRL), its gas trading subsidiary, with Reliance Power.

The merger will strengthen ADAG's case for gas allocation from D-6 since with this, the gas trading arm stands merged with the power generating company. So far the government has allocated gas only for actual users like power and fertiliser units. The only exception is city gas distribution company Indraprastha Gas to which a small allocation has been made.

Analysts say after the signing of the agreement, RNRL became almost a shell company with no major activities as it was formed for the supply and transportation of gas from the various gas fields of RIL to ADAG companies for power and other projects. "Unfortunately, RNRL will become ashell company if the gas supply contract is not honoured," Anil Ambani had told RNRL shareholders in July 2009.

RNRL currently has an acreage of 7,000 sq. kms, comprising four coal bed methane blocks and one block for exploration of oil and gas.

It had also given an application to the Petroleum and Natural Gas Regulatory Board for laying a gas pipeline from Kakinada in Andhra Pradesh to Dadri in Uttar Pradesh, where R-Power plans to develop the largest gas-based power plant in the world.

RNRL was also planning to set up a 20-million-tonne capacity for cement using flyash from R-Power's coal-based power plants and enter shipping to transport coal for RPower's power plants.

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