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NTPC set to intervene in Ambani spat

NTPC set to intervene in Ambani spat
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First Published: Fri, Aug 14 2009. 11 32 PM IST

Battle royale: The Supreme Court on 1 September will hear the gas case between RIL and RNRL. Ramesh Pathania/Mint
Battle royale: The Supreme Court on 1 September will hear the gas case between RIL and RNRL. Ramesh Pathania/Mint
Updated: Fri, Aug 14 2009. 11 32 PM IST
New Delhi: NTPC Ltd, relying on legal opinion, has decided to intervene in the ongoing dispute before the Supreme Court between Mukesh Ambani-controlled Reliance Industries Ltd (RIL) and Anil Ambani-controlled Reliance Natural Resources Ltd (RNRL) over the supply of gas from the former’s gas block.
Battle royale: The Supreme Court on 1 September will hear the gas case between RIL and RNRL. Ramesh Pathania/Mint
Accordingly, India’s largest power generation utility, which is state-owned, will be filing a special leave petition (SLP) in the apex court as early as next week, two persons familiar with the development said separately.
“NTPC will be moving very fast as it has already got the legal opinion, which is in its favour. It will go to the Supreme Court to intervene,” said a person close to the development.
NTPC chairman and managing director R.S. Sharma declined comment.
The SLP will challenge the amendment judgement of a division bench of the Bombay high court.
RIL amended its petition in the Bombay high court case with NTPC so as to include an earlier affidavit filed by the Union government in the same court, but in a separate case between RIL and RNRL.
This RIL affidavit, filed in June, had reiterated the decision of a group of ministers on the $4.20 (Rs202.86) per million British thermal unit (mBtu) pricing and the policy for allocation of gas from the Krishna-Godavari (KG) basin (mBtu is a measure of gas volume).
NTPC contested the RIL amendment, but it was dismissed by the division bench of the Bombay high court.
The lawsuit between NTPC and RIL in the high court dates back to December 2005, with the point of contention being the existence and terms of a valid contract between the two. NTPC claims there is one in which RIL promised to supply 12 million standard cu. m a day (mscmd) of gas for the expansion of the state-owned power generator’s Kawas and Gandhar power plants, both in Gujarat, for 17 years at a price of $2.34 per mBtu. RIL claims otherwise.
RIL is contesting the claims of RNRL over the supply of 28 mscmd of gas from the offshore block for 17 years at $2.34 per mBtu, 44% cheaper than the government fixed price of $4.20.
RNRL is basing its claims on a 2005 family pact between the estranged Ambani brothers, but RIL has held that it cannot give gas to anybody without the approval of the government, the owner of all sovereign assets.
The Supreme Court took up the case after both companies had opposed the Bombay high court ruling and filed their petitions. The hearings are scheduled on 1 September.
The government had, in a petition filed in the apex court on 18 July, made a case for scrapping the gas supply agreement between RIL and RNRL.
Now, NTPC too has decided to intervene.
“NTPC has decided to go to the Supreme Court. As the power ministry has supported its decision, it is a matter of formality. It can happen as early as next week,” said another person aware of the development.
Hari Shankar Brahma, the power secretary, did not respond to phone calls or to a message left on his cellphone.
NTPC’s decision follows the legal opinion from attorney general Goolam Vahanvati and solicitor general Gopal Subramanium, who are India’s top two law officers. Subramanium has criticized the government for jeopardizing NTPC’s case in the Bombay high court.
Referring to RIL’s amendment in its plea in the high court in its ongoing dispute with NTPC that the contract between the two firms was scotched by the government’s policy on the pricing and allocation of gas, Subramanium, in his opinion to NTPC, said: “In fact, the said amendment by RIL seems to portray the Central government as the chief architect of the inability of RIL in being able to perform the contract.”
NTPC claims its contract with RIL dates back to 2004. The government fixed the price of RIL’s KG basin gas on 12 September 2007.
The solicitor general said in his opinion to NTPC that the Union government should take a “carefully uniform and unified stand” to protect public rights and interests following which the government on Thursday decided to form a four-member ministerial panel, comprising finance minister Pranab Mukherjee, law minister M. Veerappa Moily, power minister Sushil Kumar Shinde and petroleum minister Murli Deora, to come up with a unified stand.
While a spokesperson for the Reliance-Anil Dhirubhai Ambani Group, of which RNRL is a part, declined to comment, an external spokesperson for RIL did not respond to Mint’s query till the time of filing this story.
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First Published: Fri, Aug 14 2009. 11 32 PM IST