RNRL says invoking govt in gas pricing ‘mischievous’

Anil Ambani-led Reliance Natural Resources (RNRL), which is locked in an intense litigation with Mukesh Ambani-owned Reliance Industries (RIL) over sale of gas to it at the disputed price of $2.34 per mmBtu, on Wednesday fired another salvo saying government approval isn’t needed for sale of gas and alleged that RIL had “wrongfully and mischievously” sought to pass this off as a condition.

The plea comes in response to petitions filed by RIL and the petroleum ministry in the Supreme Court against the Bombay High Court’s June 15 ruling asking RIL to provide 28 mmscmd of gas to RNRL at $2.34 per mmBtu.

RIL said it can’t supply gas to either RNRL or the state-owned National Thermal Power Corporation (NTPC) below $4.20 per mmBtu, the price fixed by the government. “The allegation that government approval is a condition precedent to sale of gas by RIL to either (power PSU) NTPC or to RNRL is completely wrong and incorrect,” RNRL said in reply to RIL’s petition.

It also questioned Reliance Industries Ltd’s argument that government approval is required for price fixation, saying even the empowered group of ministers had decided that any policy on the subject would be without prejudice to the RIL-RNRL case.

RNRL has never questioned the ownership of the government on gas, but RIL has complete market freedom to deal with gas that belongs to it, it said. “The Anil Ambani group is of course entitled to claim damages for the loss and damage caused to RNRL on account of continuing breach and violations committed by RIL, in addition to directions to
RIL for supply of gas,” RNRL said.

RIL says it is a contractor for producing gas from the KG basin and thus does not have the power to fix price. The apex court will hear the issue on October 20. According to Reliance Natural Resources Ltd, RIL had itself conceded and stated before the courts that it would make profits even at a price of $2.34 per mmBtu and the Director General of Hydrocarbons has also confirmed it.

“The Director General of Hydrocarbons has made a public announcement on August 5 that the cost of production of  natural gas from KG D6 is USD 1.28 per mmBtu and RIL will earn a profit of USD 1.06 per mmBtu plus the marketing and risk management charges of USD 0.12 per mmBtu,” RNRL said.

Through a series of advertisements published in different newspapers, RNRL had charged the Union government with aiding RIL to make Rs 50,000 crore profit through gas sale at a higher price.

RNRL also stated that RIL has been changing its stance with regard to the memorandum of understanding signed between the two brothers four years ago, which also provides for sale of gas to it.

“This fully exposes RIL’s blatant lie and falsehood,’’ RNRL alleged. The government has kept itself away from the family memorandum of understanding, but is concerned with the gas aspect, that too without hurting the interests of NTPC. It is unlikely the apex court would go deep into the various aspects of the memorandum of understanding, a legal analyst said.