Mukesh Ambani Group firm RIL today faced some searching questions from the supreme court for its demand to raise the gas supply price to Anil Ambani's RNRL asking how will it serve the public interest.
"Was it not in the public interest that all should be supplied gas at the rate of $2.34 per mmBtu (Metric Million British Thermal Unit). If Government says that the price of gas for all will be at $2.34 per mmBtu, will it not be in public interest?", the court asked RIL.
"For making it from $2.34 to $4.20 per mmBtu you (RIL) are only the benificiary and not the public. RIL is gaining and not the public. Is it in the public interest," a bench comprising chief justice KG Balakrishnan and justices RV Raveendran and P Sathasivam observed when RIL made submissions on the marketing rights of the gas from KG Basin.
The remarks of the bench came on the sixth day of the hearing the dispute between RIL and RNRL relating to supply of gas from KG basin for which the two brothers Mukesh Ambani and Anil Ambani are engaged in a bitter fight.
RNRL is seeking gas from his brother's group RIL at rates 44% lower than government-approved price. RIL says it cannot honour the commitment made in the 2005 family agreement due to government's pricing and gas policies.
While senior advocate Harish Salve was advancing the arguments on marketing rights of the gas for RIL, the bench said "if the gas is supplied at a lower price, the country is going to be benefitted"."This is not an issue between the two brothers. The issue is how the government could regulate the price of gas arbitrarily and with this whose interest is being protected," the Bench asked.
Salve said a committee was set up to address the public interest relating to fixation of gas supply price.
The senior advocate focussed his arguments to buttress the stand that the gas supply at the rate of $2.34 per mmBtu would not be in interest of the RIL.
"I (RIL) will recover only the cost of production of the gas. What I will lose is the interest and finance charge," Salve said adding though national interest was paramount, if the price was fixed at USD 2.34 per mmBtu the RIL would be pushed for nine years to make out cost recovery from the venture. This would otherwise be only four to five years.
At this point, the Bench said, "if the cost of production is to be recovered in five years, will it not be the case that government gets the major chunk. Will it not lead to the speedier recovery... Government will get profit from gas, higher royalty".
Salve replied that if the cost recovery expands to five years than RIL will not even have the taxable income.
Further, he elaborated that the gas at present was being bought at $9 per mmBtu for RIL's Jamnagar plant in Gujarat and even the state-owned PSU NTPC is procuring it at that price. RIL said even if the gas is bought from it by other companies, they were at free will to sell it at whatever market price as the gas receipient are not party to the production sharing contract.
At this point, the bench wanted to know what will happen if the government suggests to supply gas to NTPC, fertiliser companies, domestic gas companies and others at $2.34 mmBtu.
Salve said government had told RIL that it was in public interest to supply the gas to all at $2.34 mmBtu.
This submission evoked sharp reaction from RNRL's counsel and senior advocate Ram Jethamalani, who said "the whole idea is to eliminate the younger brother (Anil)" from the gas business.
"This is the idea between the government and RIL," he said.
Jethmalani's outburst provoked additional solicitor general Mohan Parasaran, who said, "we (government) are at the receiving end from both the sides (RIL and RNRL)".
The ASG's reaction did not go down well with Jethamalani, who made a veiled attack on the Centre by referring to last week's raid by the CBI in the office of one of the government department.
"I am making a public prediction that the ministry (ministry of petroleum and natural gas) will land in same problem like another ministry which has been raided by the CBI," Jethmalani said in an obvious reference to the raid at the office of Department of Telecom in connection with the alleged irregularites in the allocation of 2G spectrum.
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