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Anil Ambani slams RIL, oil ministry

Anil Ambani slams RIL, oil ministry
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First Published: Wed, Jul 29 2009. 12 41 AM IST

Updated: Wed, Jul 29 2009. 12 41 AM IST
Mumbai: Companies and executives normally avoid commenting on matters that are before the court.
Not Anil Ambani, though. On Tuesday, the 50-year-old Ambani told the shareholders of his fuel marketing company Reliance Natural Resources Ltd (RNRL) that Reliance Industries Ltd (RIL) was acting dishonourably and out of “corporate greed” by refusing to give the former its share of the natural gas from the latter’s fertile D6 block in the Krishna-Godavari (KG) river basin.
Ambani also went on to term the petroleum and natural gas ministry’s intervention in the dispute, now before the Supreme Court, “unnecessary”, “partisan and biased”.
The Supreme Court will hear the case on 1 September and RNRL and RIL, which is controlled by Anil Ambani’s estranged elder brother Mukesh Ambani, have been lobbying the government and the media to strengthen their case.
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Commenting on Ambani’s tirade in an event that was extensively covered by the media, RIL’s legal counsel Harish Salve said: “The matter is in court and I won’t comment on it. Nobody, in fact, should be making a comment on it and I think Anil Ambani’s comments are improper.”
A spokesperson for RIL declined comment.
In an acerbic 92-minute speech, Ambani also claimed that RIL’s gas transportation costs at $1.25 (Rs60.25) per million British thermal unit (mBtu) was the highest in the country, which should be reviewed by the downstream regulator, and that the firm handling the gas transmission, Reliance Gas Transportation Infrastructure Ltd, was fully and privately owned by RIL’s promoters. This implies that the revenues from gas transportation will not accrue to RIL shareholders, but the promoters. Mint couldn’t immediately verify either claim.
Murli Deora, the minister for petroleum and natural gas, said he had no comment to offer as the matter was before the courts. “All I can say (to Anil Ambani) is best of luck.”
RNRL has staked claim to 28 million standard cu. m a day (mscmd) of gas from KG-D6 for 17 years at $2.34 per mBtu, 44% lower than the $4.2 per mBtu price mandated by the government. RNRL’s claim, the company says, is based on a 2005 agreement between Mukesh and Anil Ambani that divided the Reliance businesses between the two. For its part, RIL says it can sell its gas only at the government mandated price and to buyers approved by the government.
The petroleum ministry says that RIL is merely a contractor and doesn’t have marketing freedom. Its stance that RIL cannot sell the gas to any buyer other than those nominated in the government’s priority list and at $4.2 per mBtu, has been scoffed by RNRL
Anil Ambani claims this is simply a way to help RIL escape its commitment to share the gas.
“This bogey of sovereign ownership is being raised with the sole purpose of attempting to bail out RIL and help them renege” on the agreement to supply gas, said Anil Ambani. He added that RNRL was seeking gas from RIL’s share and that the government would not lose any money if RNRL got gas at the reduced price. He dared the government to terminate the exploration contract with RIL for the KG-D6 block if it believes the company has violated norms by “signing a commercial contract” on a sovereign asset. Union secretary for fertilizers Atul Chaturvedi has said in the past that a private pact cannot include division of a national resource. Existing power and fertilizer units are first in the line of gas-starved buyers picked out by the government in its gas utilization policy.
The legal dispute has also become increasingly complicated in the last few weeks, with an increasing number of parties pleading themselves as affected parties in the RIL-RNRL case before the apex court. Independent power companies Gautami Power Ltd, Vemagiri Power Generation Ltd and GVK Power and Infrastructure Ltd have filed petitions in the court, asking that no judgment be passed in the dispute that will be prejudicial to them and without hearing their arguments.
Speaking publicly on a spate of developments in the gas dispute for the first time, Anil Ambani said, “It is unfortunate that RIL has tried every trick in the book—and apparently several outside the book—to back out of its solemn, legal and contractual obligations.”
He added the Bombay high court had heard the arguments of the government, represented by the petroleum ministry, for six months before deciding in RNRL’s favour. He termed this “a body blow to RIL”.
The Bombay high court had said in mid-June that RIL and RNRL should sign a suitable arrangement that honoured the family pact of giving the Anil Ambani firm its promised gas. A flurry of letters were exchanged by the two companies before the attempts at reconciliation failed and both moved the Supreme Court.
The meeting on Tuesday, held at the Birla Matushri convention hall in south Mumbai, was reminiscent of a political rally rather than a convention of shareholders. Slogans such as “Deora, Hai Hai” (Down with Deora) and “Anil Ambani, aage badho, hum tumhare saath hain” (Proceed, Anil Ambani; we are with you) rent the air as Anil Ambani milked the moment.
“The court cases are not a personal fight. There is no ego...only pain, hurt and emotion…a desire for fairness and justice,” he said.
PTI contributed to this story.
bhuma.s@livemint.com
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First Published: Wed, Jul 29 2009. 12 41 AM IST