New Delhi: Reliance Industries, the target of allegations of making super-normal profits, has sought to turn the tables on Anil Ambani group by accusing it of trying to earn an astronomical Rs350,000 crore as profit with plans to trade gas bought at below market rates.
Anil Ambani Group’s Reliance Natural Resources Ltd (RNRL) wants RIL’s KG-D6 gas at preferential price of $2.34 per mmBtu but would supply the fuel to the group’s power firms at market rates, thus making Rs21,000 crore profit a year for 17 years, RIL said in reply to the petition filed by the firm.
RIL annexed RNRL’s offer document for a GDR listing that said it will supply gas to its affiliate power companies at prevailing market prices. “Such market prices may exceed the government-approved cap price of $4.20 per mmBtu (for KG-D6 gas).”
In addition, RIL claimed the Anil group’s power company that is setting up the Dadri plant in Uttar Pradesh, would make a windfall profit of Rs70,000 crore as the entire fuel cost (the price at which it gets gas from RNRL) will be passed on to the consumer.
Citing the State Support Agreement signed in 2004 between the Uttar Pradesh government and Reliance Energy, RIL said Dadri project will get a fixed cost tariff of Rs1.25 per unit, twice the industry norm for gas-based projects.
Earlier, RNRL had accused RIL of trying to make super-normal profit of Rs50,000 crore by selling gas at higher price.
“Thus, all actions of RNRL are clearly motivated by commercial greed, with the goal of pocketing trading profits,” RIL said.
“This is proven beyond doubt by the fact that RNRL contended before the division bench of Bombay high court that, if RNRL does not receive gas from RIL, it should receive cash payments equal to the difference between the $2.34 per mmBtu price and the price set by the government,” the Mukesh Ambani-led company said.
RNRL is seeking gas from RIL at a price of $2.34 per mmBtu, agreed in a 2005 family agreement. RIL has expressed its inability to supply at this rate as it is 44% lower than the government approved price. The matter is in Supreme Court, which will commence final hearing on all related petition from 20 October.
“This (demand) confirms that RNRL’s true objective is a long term stream of subsidy payments at the expense of RIL’s shareholders,” the company said.