Court defers decision on RIL gas dispute to July 12


Mumbai : The Bombay High Court Thursday said it would give its final order on July 12 on the issue of restraining Reliance Industries Ltd. (RIL) from selling gas produced from one of its prime blocks in the Krishna-Godavari basin to a third party.

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The high court, which had passed an interim order on June 22 on a petition filed by Anil Ambani owned Reliance Natural Resources Ltd. (RNRL) and state-owned NTPC Ltd., was hearing a review petition filed by the Mukesh Ambani owned RIL Thursday.

The court had stated in its interim order that 81.6 million cubic meters of gas per day (mmscmd) was earmarked for RNRL, NTPC or for RIL's captive use for the next eight years.

RIL filed a petition seeking an injunction on the order and argued Thursday that since there was no power project at the blocks and the gas was lying unused it should be permitted to sell the gas to other companies.

The country needs natural gas for its energy requirement and the gas in the Krishna-Godavari basin in eastern India should not be allowed to lie idle at a time when we are paying heavily to meet our energy requirements, said RIL counsel Harish Salve.

"We told the court that since the proposed work on the project has not yet started and production of gas will not commence before 2012, what is the point of keeping the gas underground. We have requested the court to review its order," Salve told reporters after the hearing.

RIL had in the June called for competitive bids for selling the 80 mmscmd of gas and received price bids from various power and fertiliser companies.

"RIL's deal with RNRL was confined to only 40 mmscmd. We should be free to sell the remaining 40 mmscmd to third parties as the volumes being referred to are only on discoveries made before the agreement before June 2005," he said, referring to the settlement between the two Ambani brothers.

According to the settlement, RIL agreed to supply 28 mmscmd of gas to Reliance Energy at $2.34 per mmbtu (million British thermal units).

It also agreed to sell the 12 mmscmd of gas earmarked for NTPC if its agreement with the power major collapsed.

Both RNRL and NTPC have accused RIL of going back on its word to sell gas at the stipulated price. The June bids had generated a price of $4.58 per mmbtu that is nearly double the price at which RIL had originally agreed to sell to RNRL and NTPC.

Anil Dhirubhai Ambani Group owned by Anil Ambani also accused the Mukesh Ambani group of violating the June 2005 deal between the brothers.

Sources here said that the union ministry of petroleum and natural gas, which has till now played the role of an adjudicator in the RIL versus RNRL case, may soon enter the fray.

"In its bid to make gas available to power and fertiliser companies, the government may soon take a more active role in the dispute," sources here said.

"The government earns a part of the revenue from sale of gas as profit petroleum. Any delay in sales will hit government's earnings and it is sure to enter the fray to settle the dispute."