New Delhi, Dec 3 (Inditop.com) Reliance Natural Resources Ltd (RNRL) Thursday told the Supreme Court that the Krishna-Godavari gas from Reliance Industries Ltd (RIL) was not meant for the Dadri power project alone, seeking to correct a common misconception.
“The gas supplied to the Anil Ambani Group by the Mukesh Ambani group shall not be used for trading other than trading with the Anil Ambani group,” RNRL counsel Mukul Rohatgi told the three-member bench of the apex court, quoting from their family pact.
“Swapping of gas is permitted,” Rohatgi told the bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam, quoting from the pact brokered between the two Ambani brothers by their mother Kokilaben.
The counsel said a clause of the family pact allowed internal trading or swapping of gas from the Mukesh Ambani-led RIL by the group controlled by younger brother Anil Ambani, of which RNRL is a part.
“Gas supply under the family memorandum of understanding is for all projects of the Anil Dhirubhai Ambani Group and not limited to the Dadri project alone,” he told the bench hearing the Krishna-Godavari gas dispute.
“Even if the Dadri project does not come up for any reason, the Anil Dhirubhai Ambani firm can use the gas in other projects,” Rohatgi said, adding: “The obligation of supply of gas is not limited to only the Dadri project but all power projects of the group.”
The apex court has been hearing the dispute over the supply of 28 million units of gas for 17 years at $2.34 per unit to RNRL from the gas fields off the Andhra Pradesh coast, awarded to RIL.
The price, tenure and quantity were based on a 2005 family pact, but RIL subsequently said it could only sell the gas for $4.20 per unit, as this was the price, the company claimed, fixed by the government.
Rohatgi said the Anil Ambani group was entitled to up to 40 million units of the gas from the Krishna-Godavari basin, which comprised an assured entitlement of 28 million units and additional 12 million units if RIL’s contract with state-run power utility NTPC fails.
NTPC — which is fighting a legal battle with RIL in the Bombay High Court — is entitled to 12 million units of gas per day from RIL, which will have to divert the same to RNRL in case its contract with NTPC falls apart, argued Rohatgi.
At this point, the bench asked if RNRL would settle for $4.2 per unit if NTPC agrees to the price. But Rohatgi said: “No, it’s not a case of sink or swim together. It will not and cannot bind us.”
The three-member bench then queried if RNRL admitted it did not question the government’s authority to fix gas price and its utilisation, to which the RNRL counsel replied: “Yes! But the (decision of the) empowered group of ministers does not apply on us.”
The price of $4.2 was arrived by the ministerial panel.
Rohatgi also refuted RIL’s assertion that all the gas belonged to the government. “If the contractor has no share in the gas and all gas belongs to the government, why did RIL bid for the NTPC contract?”
He added: “Cancel the production sharing contract (between the government an the contractor) if RIL has breached its provisions by committing gas to NTPC.”
Quoting from various documents, including the Bombay High Court’s ruling on the issue, the RNRL counsel sought to reiterate RIL can never make losses by selling the gas at $2.34 per unit.
“Their claim of incurring a loss by selling gas at $2.34 is incorrect,” he said, and also quoted from RIL’s own chart that showed a net cash flow of $6 billion, even by selling gas at $2.34 per unit.
