Government reiterates Ambani, NTPC gas disputes are different

Government reiterates Ambani, NTPC gas disputes are different
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First Published: Fri, Nov 27 2009. 12 52 AM IST

In the hotbed: A file photo of Reliance Industries’ drilling rig at the D6 block in the Krishna-Godavari basin.
In the hotbed: A file photo of Reliance Industries’ drilling rig at the D6 block in the Krishna-Godavari basin.
Updated: Fri, Nov 27 2009. 12 52 AM IST
The Indian government reiterated that the natural gas supply dispute between the billionaire Ambani brothers was different from one between Reliance Industries Ltd (RIL) and state-owned NTPC Ltd.
The Union government had already submitted documents to say the two cases were different, additional solicitor general Mohan Parasaran told the Supreme Court (SC) in New Delhi on Thursday. The government had not filed an affidavit on its stand, Ram Jethmalani, lawyer for Anil Ambani-owned Reliance Natural Resources Ltd (RNRL), told SC.
Reliance Natural filed an application in SC in September to make NTPC, India’s biggest power producer, a party in the dispute with RIL. The utility and RNRL are fighting separate lawsuits seeking to enforce agreements requiring RIL to supply them gas at 44% less than a government-set price.
In the hotbed: A file photo of Reliance Industries’ drilling rig at the D6 block in the Krishna-Godavari basin.
RIL, controlled by Mukesh Ambani, is trying to overturn a lower court ruling to honour a gas-supply agreement reached when the Ambani family business was divided in 2005.
RIL, which won a bid to supply gas to NTPC at $2.34 per million British thermal units (mmBtu) for 17 years, says the fuel can’t be sold at less than the government rate.
The Supreme Court 1 October dismissed NTPC’s challenge of a Bombay high court order that allowed RIL to alter its stand on the gas price.
RIL was permitted to amend its written statement and cite a federal government decision that natural gas is public property and that the state is the sole authority to decide the price.
RIL never indicated in its bid that the gas price was subject to government approval, Jethmalani said.
The panel of judges headed by Chief Justice K.G. Balakrishnan directed the government to file an affidavit on its stand in the NTPC lawsuit.
The government has said its production-sharing contract with RIL must prevail over private sale arrangements. It set the price of gas at $4.20 per mmBtu in 2007 and later selected fuel-starved fertilizer and power producers as priority customers.
Jethmalani said RNRL isn’t challenging the government’s policy. The government and RIL can’t use the policy to dishonour a bona fide contract, the RNRL lawyer said.
The gas utilization policy is, in any event, not applicable to RNRL, said Jethmalani.
The policy states that the utilization of gas will take into account the outcome of the court cases. This is evidence of the policy being prospective in nature.
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First Published: Fri, Nov 27 2009. 12 52 AM IST
More Topics: Ambani | NTPC | Supreme court | Ram Jethmalani | RNRL |