RIL shares fall after losing ruling to Anil

RIL shares fall after losing ruling to Anil
Comment E-mail Print Share
First Published: Fri, May 04 2007. 01 02 PM IST
Updated: Fri, May 04 2007. 01 02 PM IST
By Manash Goswami, Bloomberg
New Delhi: Shares of Reliance Industries Ltd. fell after billionaire Chairman Mukesh Ambani was told by a court to sell gas to younger brother Anil at below-market prices, reviving a family feud that split India’s most valuable group.
The Mumbai High Court yesterday ordered Reliance Industries to honour a contract to supply gas to Reliance Natural Resources Ltd., controlled by Anil, from its field off the eastern coast of India. Reliance Industries shares fell as much as 1.8 % while Reliance Natural Resources gained by 9.55%.
The brother’s wealth has increased to $38 billion in the past year since they divided the Reliance group, with Mukesh controlling oil and gas exploration and refining and Anil running power, communications and media assets. Reliance Industries wants to charge more for the gas as prices have risen to a record and costs for hiring rigs, buying pipelines and construction material have surged.
Mumbai-based Reliance Industries yesterday said it will appeal the ruling.
Reliance Natural Resources in November filed a suit against Reliance Industries for breaching a December 2005 agreement to supply gas to a power project in north India.
According to reports, Reliance Industries agreed to sell 28 million cubic metres of gas a day to Reliance Natural Resources. The gas was to be sold at $2.34 per million British Thermal Units.
Raising Price
India’s Oil Ministry on 26 July asked Reliance Industries to raise the price of the natural gas it plans to sell to Reliance Natural Resources. Selling gas at prices lower than what other private oil companies charge in India will reduce the royalty that the government will earn, a statement issued by the Oil Ministry, which is party to the production contract, said.
NTPC Ltd., India’s biggest power generator, filed a suit against Reliance Industries in December 2005 to enforce a gas-supply contract.
NTPC asked the Mumbai High Court to prevent Reliance from selling the fuel to any other user until the contract is fulfilled. The utility needs the gas to fire the 2,600 MW capacity it plans to add at two plants in Gujarat by 2007. Reliance won a contract to sell 3 million MTof gas at $2.97 per million British thermal units.
Reliance Industries traded at Rs1,599.8 apiece at 11: 40 a.m. Shares of Reliance Natural Resources rose as much as 9.5% and traded 3.8% higher at RS27.3 apiece. Reliance Energy Ltd. shares rose by 1.6% to Rs520.5.
Comment E-mail Print Share
First Published: Fri, May 04 2007. 01 02 PM IST
More Topics: Corporate News | Sector Spotlight |