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The Supreme Court's judgment in RIL-RNRL gas dispute might not have any material impact on Anil Ambani's power generation business given that fuel cost can be passed through for the determination of electricity tariffs. However, this is a big setback to Reliance Natural Resources Ltd, which was floated by the Group for undertaking gas marketing business.RNRL seems to have been caught in the cross-fires. It has no gas to sell. It was banking on allocation of 28 million standard cubic meter gas (mmscmd) from Reliance Industries Ltd's (RIL) D6 block in the Krishna-Godavari (K-G) basin at a concessional price of $2.34 per mmBtu. Even if gas finally comes, it would be available only at the price determined by the government.Anil Ambani had once expressed fear that RNRL would become a shell company if it was denied allocation of 28 mmscmd gas from the D6 block.While public sector entity GAIL India is a well-established player in gas marketing business, late comers like Gujarat State Petronet Ltd have also moved fast. Competition is intensifying in gas marketing business. Ambani needs to do serious introspection about why RNRL has failed to take off.There is a possibility that the $4.2 per mmBtu price fixed by the government for D6 gas might become a benchmark price for future gas production as well. That clearly calls for a drastic change in the Group' business strategy relating to RNRL.RNRL, a public listed company with some 25 lakh shareholders, should not be allowed to become a casualty of corporate legal battles. It deserves more—an opportunity to grow as a business entity.As for the Group's power generation business, the SC judgment might have an impact. Reliance Power, the Group company for developing power projects, is doing a good business. It already has portfolio of 25,000-mw power projects even if we exclude the 7,840 mw gas-based Dadri power project in Uttar Pradesh.The real trouble for the Dadri project is land acquisition and not gas price. The project can still take off even if it gets gas supply at $4.2 per mmBtu. In any case, many power projects are already using D6 gas at the government-determined price. So fuel pricing hardly matters for the Dadri power project.However, if the Dadri power project finally fails to take off for whatever reasons, Ambani will have to find another location to fulfill his dream of setting up the world's largest gas-based power project.
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