RIL refutes RNRLs claim on gas sale pact

Written by Sanjay Jog | Mumbai | Updated: Oct 8 2009, 09:26am hrs
Reliance Industries Ltd has strongly refuted allegations by Reliance Natural Resources that the Mukesh Ambani-controlled firm is motivated by commercial greed and was attempting to back out of the gas supply obligation to the Anil Ambani-led company.

RIL, in a special leave petition with the Supreme Court, notes, In all sincerity put in place the gas sale master agreement (GSMA)/ gas sale purchase agreement (GSPA), which contained the $2.34 per million British thermal unit (mmBtu) price, and created the obligation to supply gas on the terms stated therein, which were approved by the board of directors of RIL as being suitable, fair and equitable to RIL, the resulting company and the shareholders. The price of $2.34 per mmBtu was submitted to the government for approval in 2006.

RIL said the gas agreements do not impose any obligation upon RNRL. The pacts obligate RIL to supply gas if its terms are complied with, but it does not oblige RNRL to take any gas. The agreements are in the nature of an option which may be exercised by RNRL as it deems fit.Thus, it cannot be argued that the GSMA/GSPA has been thrust on RNRL. Further, RIL argued that given the fact that the parties had been negotiating for more than seven months, RNRLs contention that the Anil Dhirubhai Ambani Group (ADAG) was not given adequate time to review the GSMA and the GSPA is false and baseless. Commenting on one of RNRLs charges that ADAG was not given adequate time to review the GSMA and the GSPA is false and baseless, the RIL petition states, Though the MoU stipulated that a binding gas supply agreement would be finalised not later 45 days, ADAG dragged on discussions on the GSPA for over seven months.