Govt backs off in Ambani war, won’t interfere

The Union government has blinked in the face of the media blitz unleashed by Anil Ambani alleging bias on the part of the petroleum ministry in his battle for gas supplies from brother Mukesh’s Reliance Industries Ltd (RIL).

In an amended petition filed before the Supreme Court on Tuesday, the government said it was not interested in the Ambani family dispute or the memorandum of understanding (MoU) signed between Mukesh and Anil. The MoU calls for, among other things, the supply of gas from RIL’s Krishna-Godavari fields to Anil’s Reliance Natural Resources Ltd (RNRL) at $2.34 per mBtu (million British thermal units).

However, the government will assert its right of ownership of the gas as a natural resource, and its pricing. The Supreme Court will start hearing the case from October 20.
In June, the Bombay high court gave a verdict in favour of RNRL.  Mukesh then filed an appeal in the Supreme Court. The petroleum ministry impleaded itself into the case claiming two private parties cannot enter into a gas deal without reference to the government. The decision was seen as favouring Mukesh.

In Tuesday’s application, the petroleum ministry sought to dispel the impression that it was actively involved in the Ambani dispute. The government asserts that it is “in no way concerned with the private dispute between RIL and RNRL or between the Ambani brothers, but is only concerned with its rights as owner and regulator of natural gas’’.

However, even while asserting its rights, the petition sought to differentiate between the RIL-RNRL deal and the parallel one between RIL and government-owned National Thermal Power Corporation (NTPC). “The rights and obligations between RIL and NTPC cannot be regarded as similar in status to the private arrangement between RIL and RNRL because of NTPC’ s status as a public utility and the process involved, such as international competitive bidding,” it said. In short, the ministry is saying that though the pricing formula for NTPC and RNRL is the same, it will not treat the two deals on a par.

The government has sought to amend its earlier request in the special leave petition pertaining to the Ambani gas dispute filed on July 18. This is in recognition of the fact that NTPC is locked in a legal battle with RIL over gas prices before the Bombay high court. NTPC wants gas at the committed price of $2.34 per mBtu, which was arrived at on the basis of a global tender. The RNRL-RIL deal was based on the NTPC price, and Anil Ambani’s media blitz has tried to portray its own interests as being the same as NTPC’s.

The petroleum ministry seems to be trying to separate the two. Any decision on gas pricing, it said, was without prejudice to NTPC’s case. “It has been the unequivocal stand of the government that the approval of the price of sale of gas at $4.2 per mBtu in respect of (RIL’s) D6 block was without prejudice to the rights of NTPC in the pending suit filed by it against RIL before the Bombay high court,” the government said.

A massive advertisement campaign launched by RNRL alleged that the government-approved price of $4.2 per mBtu would cost NTPC about Rs 30,000 crore.
Seeking to quash the high court order in the RIL-RNRL case, the ministry said it would mean “losing control” of the pricing and regulation of natural gas, seriously impairing the allocation and gas utilisation policy.

“The high court has stepped into the shoes of the government by recognising the private arrangement in the matter of allocation of gas to the extent of 28 mmscmd (million metric cubic metres) to RNRL by treating such allocation as a distinct class,” it said.