MUMBAI: The Krishna-Godavari (KG) basin gas issue kept both the Ambani brothers - Mukesh and Anil - and the Bombay High Court busy through 2008. With good reason - a settlement is imperative to bring about a sea change in Indias energy economy.

The spat between the two Ambani brothers reached new peaks with younger brother Anil, the chairman of Reliance Natural Resources Ltd (RNRL), taking on elder brother Mukesh, the chairman of Reliance Industries (RIL), head on during RNRLs annual general meeting.

Despite numerous hearings and several twists and turns, a settlement proved elusive, frustrating not only the two companies involved in the spat but also several beneficiary companies and sectors banking on the release of gas from the KG basin. A government official close to the petroleum ministry said, "The entire city gas distribution plan is being laid out on the belief that the gas crunch situation in the country will ease in the coming year."

Several allied industries are also banking on the gas to take their expansion and investment plans forward. Besides, many gas-fired power plants and fertiliser units that are lying closed are also expecting 2009 to be the year when gas supplies begin.

Requesting anonymity, an analyst with a leading domestic brokerage said whichever company loses, the case will go to Supreme Court and will take more time there. "So anticipating an immediate solution to the problem is not a good idea," he said.

An industry expert said now that the government, which as an intervener was seeking to lift the stay on RIL gas, has withdrawn its affidavit, the case is now directly between RNRL and RIL and a decision is likely in January.

The government had filed an affidavit saying that RIL cannot sell gas from its Andhra offshore field below the price arrived at through a government formula. This price was $4.20 per million metric British thermal units (mmBtu).

However, RNRL said that the price that was decided between RIL and RNRL before the demerger of the companies was $2.34 per mmBtu.

The gas was expected to be released from the KG basin from January 2009 but experts feel it might be delayed till April 2009 and even further if the case is not settled.
Source : Central