New Delhi, December 09: Reliance Industries Ltd (RIL) had itself sought the oil ministry’s nod to sell gas from the Krishna-Godavari basin at $2.34 per unit to the state-run NTPC based on a global tender, Reliance Natural Resources Ltd (RNRL) told the Supreme Court Tuesday.
Quoting from documents, including RIL’s communication to the oil ministry, RNRL counsel Mukul Rohatgi told the court that $2.34 per unit was also sought as the base price for gas sales to all consumers, including his client.
‘RIL and RNRL signed a gas supply master agreement on Jan 12, 2006 under which RNRL can purchase up to 28 million units of gas per day for power generation,’ Rohatgi said, quoting from RIL’s letter of April 14, 2006 tothe oil ministry.
‘Gas supplied under the gas sale and purchase agreement is for power generation. The contract price is the same as the price bid by RIL in an international competitive bidding process for supply of gas to NTPC,’ he said, quoting the letter. ‘Under the relevant provisions of the production-sharing contract, we request your approval of the above price as the commodity price, as the price of gas,’ Rohatgi further added from the letter.
‘Once the valuation is done as per the production-sharing contract, RIL can sell the gas at $2.34 to RNRL,’ he told the three-member bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam.
Anil Ambani-led RNRL today accused the Mukesh Ambani group of scuttling its “unqualified” rights to get gas at USD 2.34 per unit from the KG basin by telling the Supreme Court that RIL was demanding a higher price despite being assured of a whopping Rs.30,000 crore profit at this rate.
“The submission of RIL that the gas can only be sold at 4.20 per unit is only an attempt to inflate its profit. The Government will obtain no additional benefit from such pricing and the net effect will only be enrichment of RIL,” RNRL told a Bench headed by Chief Justice K G Balakrishnan.
Rohatgi also filed a four-page affidavit, and quoting from it he said RNRL had every right to get the Krishna-Godavari gas for the price, quantity and the tenure as mutually agreed with RIL. ‘RNRL has unqualified rights to get 28 million units of gas per day for 17 years at the price of $2.34per unit,’ he said, adding it must be delivered at $3.18 per unit, including the transportation cost and the marketing margin.
Quoting from an answer by the oil ministry in parliament, Rohatgi also sought to impress upon the court that even the government was conscious of the fact that the sale of gas by RIL was under a new exploration and licensing regime.
Under this regime, the contractor has full marketing freedom on the sale of gas, unlike the administered price mechanism regime, where everything — including the price and the intended consumer — had to be approved bythe government.
It contended that the supply of gas at USD 2.34 mmBtu for 17 years will not cause any loss either to the government or Mukesh Ambani group. “There will be no impact on the Government at all and it will suffer no loss whatsoever. RIL will also make a profit of Rs.30,000 crore at this rate,” RNRL said in an affidavit before the Bench.
“In case the Government values the gas at 4.20 per mmBtu and RIL sells gas to RNRL at the price of 2.34 per mmBtu, the Government will still obtain its full share of the profit on gas,” it said before the Bench also comprising Justices B Sudershan Reddy and P Sathasivam.
–Agencies