Located about 40 odd kilometers east of New Delhi, the national capital, ‘Dadri’ is a small village in the Ghaziabad district of Uttar Pradesh. If you follow a small dirt track near this village, you would soon reach an open plot of about 2500 acres. One can see some freshly planted saplings on the open plot along with two rusted corrugated iron shades. One of the shed has a sign saying ‘Reliance Energy Generation Ltd.’ In the year 2005, then chief minister of Uttar Pradesh, Shree. Mulayamsingh Yadav had signed an agreement with Mr. Anil Ambani of Reliance Energy Ltd, to set up a gas based power project of 8000 Megawatts capacity on this open plot of land in Dadri. The cost of the project was then estimated to be 10000 Crores. The project had envisaged, use of natural gas, found offshore in the Krishna –Godavari basin, on the east coast of India, as fuel. It was also proposed, that major potion of power requirement of New Delhi, would be met by the Dadri Power.
New Delhi, the national Capital of India, and old Delhi city, are facing unprecedented power shortages these days. Some parts of the city have to go without power, even for 10 to 12 hours every day. There is a ban on use of air conditioners and with summertime temperatures reaching up to 45 degrees celsus, life has truly become hell. Federal Government, which keeps on bragging about the progress made by the country, finds it hard to believe that in the national Capital, it cannot ensure continuous power supply. The main reason for this pathetic situation lies in the fact, that Mr. Anil Ambani’s ‘Reliance Energy Generation ltd.’ has not been able, even to start the work on the project at Dadri.
Reliance land in foreground, NTPC plant is seen in background
All such mega projects always face some kind of disputes, in the beginning. There is nothing unusual, in that. The present Uttar Pradesh Government led by shree. Mayavati, resents the fact that major concessions had been given to ‘Reliance Energy’ for this project. However, this cannot be considered as a valid reason for ‘Nonstarter’ state of this project.
The real problem lies somewhere else. After death of their father, Ambani brothers signed a memorandum of understanding, in the year 2005, to distribute their father’s industrial empire to themselves. The entire petrochemical business was given to Mukesh Ambani with Energy, Telecommunications and finance companies going to Anil. As part of this agreement, Mukesh agreed to supply every day, 28 million cubic meters of Natural Gas from KG basin, which was now controlled by him, to Anil’s companies at a fixed rate of US$ 2.34 per million B.T.U. for next 17 years.
Subsequently, Government of India fixed the rate of KG gas for all consumers at US$4.1 per million B.T.U. Reliance Industries Ltd, have even started supplying KG gas to some fertilizer companies at this rate. Mukesh Ambani’s Reliance Industries then claimed that since the Government has fixed the KG gas rate, all previous contracts were null and void.
Mr. Anil Ambani challenged this and to settle the dispute, reached High Court of Mumbai. This court gave a verdict favouring Mr. Anil Ambani. The matter is now with the Supreme Court of India with Government of India joining Mr. Mukesh Ambani.
At the current Government fixed market rate for KG gas, Mr. Anil Ambani could never hope to get kind of profits envisaged by him from Dadri Project. He could earn such profits, only if he gets the gas, at contracted price. On the other hand, the Government says that KG gas is national wealth of India and as such Mr. Mukesh Ambani, being merely the contractor for Government, has no right to fix the price. Only Government is empowered to fix the price and it has to be same for all consumers. Dadri’s future now depends upon the decision of the Supreme Court.
With so much of delay in even starting this project, suffering of the common man of Delhi is not likely to end any sooner.
30 July 2009