Selling CBM to friends and family, Essar style!

Vol 13, PW 15 (14 Jan 10) Midstream & Downstream

Essar clearly wants to keep its CBM riches in the family! PETROWATCH learns the Ruia clan that controls the company wants to sell CBM from its Raniganj block in West Bengal to a fertiliser plant set up by the Kanodia family – related to the Ruias.

Thirty-one-year-old Nishant Kanodia is the son-in-law of Essar Group vice-chairman Ravi Ruia. Nishant’s family owns a BPO and IT solutions company called Datamatics.

Under consideration is a plan that would see Nishant take responsibility for setting up a fertiliser plant, we hear. “At first it was just one of several alternatives,â€‌ says an industry source.

“Essar has been thinking of ways to make money from its Raniganj CBM for some time.â€‌ Essar initially considered selling CBM to power stations or gas retailers as CNG and piped gas.

“But eventually it was decided that the Kanodias would set up a fertiliser plant and the Ruias would supply the gas!â€‌ we hear. Essar is closely involved in setting up the fertiliser plant too.

“They’ve been working on this project since May last year,â€‌ we hear. “Essar has sent a small team to the area for an initial investigation and begun acquiring land for the plant.

â€‌ We also learn a public hearing with local officials and residents took place last month (December) to hear objections to the land acquisition. Some expect the project to run into trouble.

“It’s never easy to acquire land in West Bengal,â€‌ we hear. “This is a Communist-run state.

â€‌ Essar sources confirm the company is hoping to sell CBM from Raniganj to the plant, expected to be ready in two or three years. But they insist this gas will be sold at market-determined prices, and not at a family discount! Other sources in the DGH tell us Essar has yet to formally announce its plans.

“Essar is producing a few thousand cubic metres of gas at the moment,â€‌ they say. “All is flared.