Supreme Court issues notice to Centre, CBI, RIL on gas controversy

The Supreme Court on Monday issued notice to Centre, Reliance Industries Ltd (RIL) and others on a PIL seeking cancellation of contract for exploration of oil and gas concerning the KG block and to impose penalty for failure in adhering to commitments.

A bench headed by Chief Justice P Sathasivam sought response from CBI on the petition filed by Civil society members including former Cabinet Secretary TSR Subramanian and ex-Naval chief Admiral L Ramdas seeking probe by the agency in the alleged "collusion between RIL and the political establishment".

The bench, which had earlier also issued notice to the Centre on a PIL filed by CPI MP Gurudas Dasgupta, asked the parties to file their response within four weeks and tagged the case with Dasgupta's petition.

The petitioners, also including former Secretary Ramaswamy Iyer and NGO Common Cause, challenged the Centre's decision to raise the price of natural gas.

"Issue order directing a thorough investigation by an SIT or CBI under the supervision of this court, into the high level collusion between RIL and the political establishment and the corruption involved, as has been highlighted in the instant petition, including on the aspects of not taking any action against RIL for its misconduct," the petitioners said.

They also sought direction for a thorough audit by CAG of the working of the production sharing contract (PSC) governing KG block, gold plating by RIL, the underproduction by RIL and all related issues.

"Issue a writ of mandamus or any other appropriate writ directing the Union of India to cancel the PSC with RIL and NIKO concerning the KG block and/or levy appropriate penalty against them because of RIL’s persistence failure in adhering to their commitments, deliberate underproduction, gold plating and mala fide conduct, and put the D-6 field of KG Basin for auction," the petition said.

The government recently decided to increase the price of natural gas from USD 4.2 per million British thermal unit (mbtu) to USD 8.4 mbtu from April 1, 2014.

The new USD 8.4 mbtu price, which will be reviewed every three months, will apply to all the gas producers uniformly including state-owned firms like Oil India Limited (OIL) and Natural Gas Corporation (ONGC) and private companies like RIL.

RIL has, in its affidavit filed in the apex court, refuted the allegation levelled by Dasgupta that it is deliberately reducing production of gas in KG basin in anticipation of a higher gas price and said it has taken all steps for arbitration proceedings with the Centre to sort out all disputes.

In a 51-page affidavit, the company contended that the allegations levelled by Dasgupta in his PIL are baseless, claiming there is "not an even an iota of substance" in it.

"These Respondents (RIL and others)submit that there is not even an iota of substance in this allegation. The petitioners seek to allege that by reducing production of gas, these respondents have hoarded the gas in anticipation of a higher gas price.

"Any allegation which suggests that a contractor has possibly deliberately suppressed the production of gas from a producing well(s) betrays complete disregard of the technical and technological realties of the process of production of natural gas from these reservoirs," the affidavit said.