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Petroleum ministry denies bias in Ambani vs Ambani battle

Petroleum ministry denies bias in Ambani vs Ambani battle
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First Published: Wed, Aug 27 2008. 06 15 AM IST

Contract dispute:NTPC’s plant in Gandhar, Gujarat. The gas from Reliance’s basins was meant for NTPC’s plants in Gujarat.
Contract dispute:NTPC’s plant in Gandhar, Gujarat. The gas from Reliance’s basins was meant for NTPC’s plants in Gujarat.
Updated: Sun, Aug 31 2008. 03 36 PM IST
New Delhi: The petroleum ministry on Monday denied charges that it is promoting the interests of Mukesh Ambani-led Reliance Industries Ltd, in a lawsuit between Reliance and his brother Anil Ambani-owned Reliance Natural Resources Ltd (RNRL) over a gas supply agreement.
Contract dispute:NTPC’s plant in Gandhar, Gujarat. The gas from Reliance’s basins was meant for NTPC’s plants in Gujarat.
The ministry’s reaction came in response to a claim made by Revolutionary Socialist Party (RSP) leader Abani Roy that he had objected to the appointment of the government counsel in the case, T.S. Doabia, to Prime Minister Manmohan Singh earlier in February.
On Thursday, Doabia told the Bombay high court that state-owned power utility NTPC Ltd did not have a “concluded” deal with Reliance.
His statement has weakened the position of NTPC, which had lodged a separate lawsuit with Reliance over the gas issue, involving the supply of 12 million standard cubic metres of gas per day (mscmd) to NTPC for 17 years at $2.34 (Rs102.02 today) a million British thermal unit (mBtu).
NTPC’s lawyer has written to his counterpart in the petroleum and natural gas ministry that statements Doabia made in the high court were “factually incorrect and contrary to the stand” taken by NTPC till now.
In its letter dated 23 August, NTPC’s legal counsel wrote the company does “not agree with the statement made by Doabia” and that “in any event, the same cannot be construed, or interpreted to be a pleading” in its lawsuit against Reliance for securing gas from the latter’s fields in the Krishna-Godavari basin.
In the letter written to the Prime Minister, Roy—who is also a Rajya Sabha member—had said that since Doabia had earlier written to markets regulator Securities and Exchange Board of India (Sebi) criticizing Reliance Power Ltd’s initial public offering (IPO), his appointment would mean a conflict of interest in the court case between the Ambani brothers. Reliance Power is promoted by Anil Ambani.
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A senior petroleum ministry official, who didn’t want to be identified, said, “It is not fair to make such allegations. We were advised by the law ministry and the attorney general of India to intervene in the case. The government is a party to the case between RIL and RNRL as it is the government, which has the highest stake in the case, with RIL only being the contractor.”
Roy’s letter to the Prime Minister had said: “I strongly feel the appointment of justice T.S. Doabia (retired) in any manner with this case will be against our constitutional framework, which envisages an independent judicial system, insulated from partisan political influences.”
RSP is a part of the Left front that used to support the Congress-led United Progressive Alliance government in Delhi before withdrawing its support in July, which means Roy has little clout over the government.
“I had objected to Doabia’s appointment to represent the petroleum ministry in the gas supply agreement case between RIL and RNRL. The matter needs to be inquired. I did not get any response. If they had taken action that time, this could have been avoided,” said Roy.
Doabia declined to comment. Reliance didn’t respond to the questions emailed by Mint. Email queries to a Sebi spokesperson weren’t immediately answered.
A spokesperson of the Reliance-Anil Dhirubhai Ambani Group said: “Doabia had made representations to Sebi against Reliance Power IPO. All the allegations were turned down by (the) Sebi/SAT (Securities Appellate Tribunal). In our view, such a statement is adverse to NTPC’s interests and the same has been stated by our counsel in the court.”
Meanwhile, differences have emerged within the government on the issue, with the power ministry blaming the ministry of petroleum and natural gas for weakening NTPC’s case.
The government lawyer’s declaration has already been criticized by a minister in the Union government, who said it would “create a big stink”, as reported by Mint on 22 August.
NTPC, whose lawsuit against Reliance dates back to December 2005, has always claimed it has a “concluded” contract with Reliance on the gas from the latter’s fields in the Krishna-Godavari basin. The gas was meant for two NTPC plants in Gujarat, which have now been delayed.
“The government counsel’s statement in the gas supply case was incorrect and we have a ‘concluded’ contract with RIL on the supply of gas. We have the support of our parent ministry which is the power ministry,” said an NTPC executive, who didn’t want to be named.
RNRL’s litigation against Reliance started in November 2006 and the former has claimed it has rights, courtesy an agreement signed when the Reliance group’s assets were split between the estranged Ambani brothers, to 28mscmd of gas from the latter’s Krishna-Godavari basin fields, and an additional 12mscmd if Reliance’s agreement with NTPC breaks down, both at the same price at which Reliance had agreed to supply gas to the state-owned power generator, that is, $2.34 per mBtu. Reliance wants to supply the initial 40mscmd of gas from the fields to buyers other than NTPC and RNRL.
Bhuma Srivastava in Mumbai contributed to this story.
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First Published: Wed, Aug 27 2008. 06 15 AM IST