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| Edited By: Sreejiraj Eluvangal |Source: DNA |Updated: Mar 30, 2018, 02:54 AM IST
Two days after the Supreme Court of India turned down its demand for gas at 2003 prices, the Anil Ambani group took an uncharacteristically conciliatory tone, both towards the Mukesh Ambani group as well as the government.
Jayarama Chalasani, CEO of Reliance Power, the group’s power generation subsidiary, seemed to be aiming for a substantial share of Reliance Industries’ future gas production, even if the supply is done at the higher price fixed by the government.
“The government and director general of hydrocarbons (DGH) have said that the KG Basin (RIL’s D6) itself can produce 120 mmscmd of gas... With other discoveries, the gas production in India is likely to increase to 300-400 million cubic metres per day (from current 170 million),” Chalasani told DNA, partly betraying the group’s desperation to get its hands on what it knows to be RIL’s untapped resources.
Nearly all of the current peak production of 80 million cubic metres from RIL’s fields has already been parcelled out by the central government among a variety of users.
The conciliatory tone is seen as both a reflection of the crucial part the Mukesh Ambani controlled gas fields play in Anil Ambani’s power plans as well as awareness of the enormous amounts of gas that lies within the elder brother’s (RIL’s) gas fields in the Bay of Bengal. Perhaps, it is also preparation for the next round of battle.
The stand is countered by Reliance Industries, which points out that it does not have any right to promise gas to anyone due to the new gas allocation policy.
Unlike when the demerger scheme and the first supply agreement was signed, the government now has all the right to allocate gas to different players. As a result, any promise by RIL to deliver gas in the future, at any price, is likely to fall foul of the government policy again.
Legal experts expect the two sides to end up before the company court in 14 weeks’ time, no closer to a ‘negotiated settlement’ than they are now.
At that point, most believe, the Anil Ambani group is likely to beseech the court to tweak the RIL demerger scheme into a form where it can be implemented.
“The court does have the power to modify the demerger scheme if it is found that it cannot be implemented due to current laws,” says Abhishek Tripathi, a Delhi-based lawyer, who worked for one of India’s top three corporate law firms before branching out on his own.
Indeed, while the Anil Ambani group did face reverses on the gas price issue, the Supreme Court dismissed RIL’s contention that the demerger scheme cannot be altered by the judiciary.
“Therefore, contrary to RIL’s argument, Sections 392 and 394 are applicable. Further, the power of the court under Sections 391 to 394 of the Companies Act is wide enough to make necessary changes for working of the Scheme,” Friday’s judgement by the three-judge bench noted.
Tripathi, however, dismisses the possibility of the court making drastic changes to the demerger scheme, such as swapping the gas business for the retail business, but believes it is well within its powers to order cash compensation to the Anil group.
“It can be argued that not getting gas at $2.34 from RIL dampens the valuation of the demerged entity (Anil Ambani’s Reliance Natural Resources) as it will now have to secure it at a higher price from the market. If the court orders a cash compensation from RIL to RNRL, I don’t think it will be changing the fundamental nature of the demerger scheme,” he said.
