Friday, 14 November 2008

RIL-RNRL case: Govt says it will finalise gas price

Mukesh Ambani-led Reliance Industries (RIL) cannot sell gas to anybody at a price less than $4.20 per British Thermal Units without its approving the pricing formula, the government informed the Bombay High Court on Friday through an affidavit.

Division bench of Justices J N Patel and K K Tated was hearing the dispute between RIL and Anil Ambani-owned Relaince Natural Resources (RNRL) over gas supply master agreement pertaining to supply of natural gas from RIL's Krishna Godavari reserves to RNRL's power plants at a predetermined price.

The government affidavit, filed by the Ministry of Petroleum and Natural Gas undersecretary, S Sundaram, stated that the sale of gas "at a price less than $4.20 per mmBTU is not envisaged as per the Empowered Group of Ministers' decision taken in accordance with Production Sharing Contract (between government and RIL)".

Earlier RIL had argued that it could not supply gas to RNRL at $2.34 per mmBTU, which RNRL argued was in accordance with the memorandum of understanding between Ambani brothers before the Reliance demerger. RIL had contended that the price at which RNRL sought the gas was subject to government's approval, which in turn, the government endorsed in its affidavit filed today.

RNRL had, however, said that government would only be concerned with the price of its (government's) share of the gas under the production sharing contract.

But the government's affidavit stated that price formula approved by eGOM and subsequently accepted by RIL, is applicable to 'all gas', including government's share as well as the gas which RIL will sell to other parties.

RNRL counsel Ram Jethmalani, however, will cross examine Sundaram, if allowed by court, on November 27 when the matter will come up for further hearing.

Source: EconomicTimes

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