RNRL writes to govt on RIL gas price

MUMBAI: Anil Ambani’s Reliance Natural Resources (RNRL) has written to the government stating that a decision on Reliance Industries’ (RIL) gas-pricing issue should be taken subject to the final decision of the Bombay High Court.

The court on June 20 ordered RIL to restrain from creating any third-party interest or contract with respect to 81.6 million metric standard cubic metres per day (mmscmd) of gas from D-6 block in the Krishna Godavari basin.

With this, RIL cannot sell 12 mmscmd of gas committed to NTPC, 28 mmscmd committed to RNRL, 25 mmscmd for RIL’s captive consumption and another 16.6 mmscmd for RNRL, totalling to 81.6 mmscmd of gas against production of 80 mmscmd of gas likely to commence from June 2008.

An RIL spokesperson declined to comment. The Reliance Anil Dhirubhai Ambani Group (ADAG) has warned of legal remedies if RIL violates any of the provisions of the non-compete agreement.

“The Reliance ADAG firmly believes that RIL is deliberately and systematically violating the major elements of the demerger scheme of 2005. We will take all necessary steps to enforce our rights in each of the agreements,” an ADAG spokesperson added.

The spokesperson said all necessary measures could also include legal remedies. “RIL’s ‘unbusinesslike’ and unethical conduct in systematically violating every agreement is an abject lesson to those seeking to have business dealings with the company,” ADAG added.

In a letter to Pranab Mukherjee, chairman of the Empowered Group of Ministers (EGoM) RNRL’s group president AN Sethuraman said, “It is clear from the above that the initial production from KG -D6 basin is 80 mmscmd only. There is no gas available that can be dealt with by RIL. Accordingly, it is currently an academic exercise for RIL to be seeking approval for its proposed gas-pricing formula, and to be engaging petroleum ministry and EGoM for this exercise.”

“Alternatively, if for any reason, the petroleum ministry and the EGoM still intends to grant approval for its formula, it may be clarified that the same is subject to the final decision of the Bombay High Court in this matter, and is without prejudice to the rights of the parties therein,” said the letter.

If EGoM considers RNRL’s request, it may approve a formula with modifications as suggested by the committee of secretaries and PM’s panel. It would mean RIL has to announce new bids to find the price of its KG gas.

However, it would be only to fix the gas price, on which the government share may be worked out. But RIL will have to wait for the final court order to get into commercial contracts to sell its gas.