Ril Vs Oil Ministry

RIL VS. OIL MINISTRY By Abhishek Bhattacharya IME The Reliance-Anil Dhirubhai Ambani Group (R-Adag) said on Thursday that it was surprised at the haste shown by the oil ministry in defending the “apparently inflated” costs incurred by Mukesh Ambani-led Reliance Industries Ltd (RIL) in developing natural gas fields. Pricing war: A file photo of RIL’s KG basin. R-Adag also sought a speedy audit by the Comptroller and Auditor General of India (CAG) and independent revalidation of the expenses. CAG audits the accounts of state and central institutions. o “We were surprised to learn from media...that RIL...justified the massive escalation in development costs... We were also surprised that the petroleum ministry, within the short time of less than a day that was available for verification, defended RIL’s apparently inflated capital expenditure,” R-Adag group president A.N. Sethuraman wrote in a letter to petroleum secretary R.S. Pandey. In a related development, RIL on Thursday hit out at state-owned power utility NTPC Ltd for misleading the government by saying that it was not aware of the condition that the price of gas to be supplied to it was subject to the Union government’s approval. “NTPC’s letter to the government at this stage is clearly an afterthought intended to mislead the government,” RIL’s petroleum business chief P.M.S. Prasad wrote in a letter to Pandey. NTPC is fighting against RIL at the Bombay high court over the pricing of gas from the latter’s field in the Krishna-Godavari basin. A three-year-old corporate battle between RIL and Reliance Natural Resources Ltd, a group company of R-Adag, over the pricing of gas from the same field, has escalated to the Supreme Court, which is scheduled to hear arguments on the case on 1 September. Meanwhile, the Supreme Court is likely to defer its hearing on the dispute between RIL and RNRL to 4 September, as chief justice K.G. Balakrishnan may lead a constitutional bench of the court on 1 Spetember, people aware of the development said on condition of anonymity. Matters pertaining to the gas dispute is scheduled to be heard by a three-judge bench headed by the chief justice on 1 September. There has been no official confirmation on the possible change of dates. Mukesh Ambani-led RIL on Thursday hit at state owned NTPC for “misleading” the government by saying that it was not aware of the condition that the price of gas to be supplied to it was subject to Centre’s approval.

RIL VS. OIL MINISTRY “...NTPC’s letter to the government at this stage is clearly an afterthought intended to mislead the government,” director on RIL board and head of Petroleum Business PMS Prasad told petroleum secretary R S Pandey in a communication amid an ongoing battle with the power PSU over gas supply on a price bid in 2004. The letter comes days after the government made it clear that the empowered group of ministers approved price of $4.2 per mmBtu for RIL’s KG basin gas was without prejudice to the ongoing legal battle, where NTPC is seeking the fuel at a committed price of $2.34 per mmBtu. Prasad said “the fact is that NTPC was not only aware of the requirement of gas price approval under the Production Sharing Contract but had in fact insisted upon and agreed to its inclusion as a condition precedent to the gas supply agreement.” He was referring to the reports that NTPC chairman R S Sharma had written to the government that “RIL did not convey to NTPC that the price of gas quoted by RIL in the international competitive bidding was subject to approval of the government under the PSC.” Sharma did not take calls made for his comments. Listing out over half a dozen instances in various agreements to assert that the state power major was aware of and agreed to the price being subject to the government approval, Prasad said if the NTPC chairman was denying knowledge of this, nothing can be farther from the truth. NTPC is actively pursuing a case for moving the Supreme Court on the issue, as RIL has recently got its petition approved in the Bombay high court stating that government’s policy on pricing of gas would frustrate the contract. RIL further said that during the entire period of 16 months of negotiations of GSPA with NTPC, the issue of government gas price approval was never objected to by NTPC. On the contrary, NTPC themselves had referred to the requirements for such government approval, Prasad said. In the letter, a copy of which was also marked to power secretary H S Brahma, RIL said that having signed the PSC with the government in April 2000, it was well aware of the provisions and the requirements relating to the government approval for the price. “This position had accordingly been conveyed by RIL to NTPC in no unambiguous terms,” RIL said. “... What is pertinent is that obtaining of such approvals was applicable to both RIL and NTPC and waiver of any condition precedent was possible only by mutual agreement of both parties,” it added. “Even when NTPC has approached the Bombay high court in 2005, as evinced by the proceedings, the fact that government approval was required” prior to the sale of gas remains a position accepted by both parties, Prasad said. Prime Minister Manmohan Singh is not intervening or mediating in the Ambani brothers’ gas dispute, though he believes that the two top industrialists should patch up in national interest, an official in Prime Minister’s Office said. The official, who did not want to be named, said that the reports in a section of media were not true that Singh has suggested the two brothers to follow a middle-path to resolve their ongoing dispute over natural gas from Krishna-Godavari basin.

RIL VS. OIL MINISTRY He, however, said that Prime Minister’s known views have been that the two warring brothers should patch up and work together. “PM’s general approach has been that instead of fighting, they should patch up as both their groups contribute sizeably to India’s economic growth,” he said. Anil Ambani group firm RNRL is fighting a long-running legal battle to secure gas at a committed price of $2.34 per mmBtu in accordance with a family agreement from elder brother Mukesh Ambani-led RIL and their case is coming up for hearing in the Supreme Court on 1 Septem