Mukesh: govt cant move goalposts

Written by Anupama Airy | New Delhi, Jul 30 | Updated: Jul 31 2007, 05:14am hrs
Reliance Industries Ltd (RIL) has officially conveyed to the government its position that it would scrap the countrys largest gas project (D6) in the K-G basin if its gas pricing formula was not cleared within a month. FE first reported this development on July 29.

Official sources confirmed that RIL chairman Mukesh Ambani met the cabinet secretary last week and communicated his groups stand on the issue. A letter to this effect has also been submitted by RIL to petroleum minister Murli Deora, the sources said.

Questioning the governments decision to debate the provisions of the production sharing contract at this stage, RIL has told the government: If cheap gas was the aim, then the government should have legitimately sought it and the contractors would have bid on the basis of gas prices/tariff, as is being done in the power sector.

Subsidised gas is now being sought on the claim that the governments profit share should be a secondary consideration. This is unfair to the contractors who had bid on the basis of maximising the net profit value to the government, RIL has told the government.

Reliance has also said uncertainty over policy issues sent wrong signals to lenders, vendors and suppliers to the D6 and pipeline projects, as all of them perceived these changes as increasing risks. Moreover, the government, as a party to the contract, cannot move the goalpost seven years after the contracts have been signed, the company said.