The government counsel, Mohan Parasaran, on Tuesday, submitted an affidavit in the Bombay High Court seeking to vacate the stay which says that no third party rights can be created for selling gas from the KG-basin blocks. The divisional bench of Justice KK Tated and JN Patel are hearing an ongoing legal battle between Mukesh Ambani-led Reliance Industries (RIL) and Anil Ambani-controlled Reliance Natural Resources Ltd (RNRL). The two companies are engaged in a tussle over the price at which RIL is committed to supply gas from its discovered offshore fields in the Krishna-Godavari basin to RNRL?s power projects.
Parasaran stated that gas from the KG Basin should be sold as per marketing priorities of the government and the price for the gas is to be set by the empowered group of ministers (EGOM). The price will be uniform for public sector units as well as government nominees. It may be recalled that last year, the government had set the price at which gas from the KG basin was to be sold at $4.20 mmbtu (million metric British thermal units). This is the price at which RIL is supposed to sell gas to fertiliser and power companies.
It may be recalled that RNRL is demanding a firm supply 28 million metric standard cubic meters per day (mmscmd) of gas at $2.34 per mmbtu for 17 years from RIL.
Harish Salve, the counsel for Reliance Industries, while responding to RNRL’s demand, said that if RIL sells gas from the KG basin at $2.34 per mmbtu, it will not even recover the cost of production. This, said Salve in a submission to the Bombay High Court, is because his client, RIL, has spent nearly $10 billion in the past three years on the KG basin exploration field.
Salve, while opposing RNRL?s demand, said that the price at which RIL sells gas needs government approval. Further, the quantity it can sell is dependant on its proven (P1) reserves, and for the term, the company is dependent on the development plan.
In a nutshell, he stated that RIL cannot commit to give (RNRL) anything that is beyond its capacity.