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| Ambanis' gas dispute set for Supreme Court date |
| Press Trust of India / New Delhi Oct 18, 2009, 17:09 IST |
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Two of the top corporate houses — headed by estranged industrialist brothers Mukesh and Anil Ambani — are set for a showdown in the Supreme Court, which will on Tuesday commence hearing on their gas supply dispute.
The fight relates to supply of gas to Anil Ambani group's Reliance Natural Resources (RNRL) from D6 block in Krishna-Godavari eastern offshore fields of elder sibling Mukesh-led Reliance Industries (RIL).
Days before the beginning of hearing in Supreme Court, Anil Ambani also made a surprise truce offer to resolve the dispute cordially, but Mukesh Ambani questioned its sincerity without rejecting the proposal.
In a public statement on October 11, Anil said all the disagreements could be resolved within weeks, but RIL questioned the sincerity of the offer made "through the public domain" and said Anil could have easily contacted his elder brother directly.
RIL also asked Anil to demonstrate the bonafide of his intentions behind the latest overture, adding it "welcomes this positive indicator and will not be found wanting in responding to them constructively".
While RNRL is seeking supply of natural gas at a previously agreed price of $2.34 per mmBtu, RIL contends that it cannot do so as the government approved the rate for the gas at $4.2 per mmBtu and it would not make profit at a price committed in 2005.
RNRL is seeking a minimum 28 million standard cubic meters per day, or more than one-third of the peak output from RIL's KG-D6 fields, for a period of 17 years.
The two parties approached the Supreme Court following a Bombay High Court ruling on June 15, where RIL was asked to honour its commitment in the 2005 family settlement agreement for supply of gas to RNRL and both parties were directed to finalise a pact within a month.
Besides their initial cross-appeals, both parties have filed a number of affidavits and submitted various documents related to their case with the Supreme Court, which would begin hearing on October 20 on these as also the admissibility of a petition filed by the central government.
The government has sought to become party to the dispute and has contended that national resources cannot be appropriated through private family arrangements and it alone holds the right to approve rates and decide on customers keeping national priorities in mind.
Last week, the Petroleum Ministry also sought to expand the legal team that would argue the government's stand on the Ambani gas dispute before the apex court.
Among the various affidavits filed with the Supreme Court in this case, directors of RIL have separately contended that the company's board had not approved the family MoU, which divided gas between companies run by the two brothers.
Reacting to this, Anil Ambani Group alleged that RIL directors' claims of not having approved the Ambani family MoU and actions of their Chairman Mukesh Ambani, who signed the pact, were in breach of criminal trust and fiduciary duties.
RNRL also questioned the locus standi of directors of Reliance Industries to file individual affidavits saying they were not parties to the case and had not taken permission of the court to file the same.
In another affidavit, RIL said the government will lose Rs 22,600 crore in revenues if RNRL was supplied gas at a price of $2.34 per mmBtu, while the Anil Ambani group firm will make a windfall profit of Rs 23,800 crore.
Prior to this, RIL had also told the court that RNRL was trying to earn an astronomical Rs 350,000 crore as profit with plans to trade gas bought at below market rates.
RNRL wants gas from RIL at preferential price of $2.34 per mmBtu but would supply the fuel to the Anil Ambani group's power firms at market rates, thus making Rs 21,000 crore profit a year for 17 years, RIL said in a filing.
In addition, RIL claimed the Anil group's power company that is setting up the Dadri plant in Uttar Pradesh, would make a windfall profit of Rs 70,000 crore as the entire fuel cost (the price at which it gets gas from RNRL) will be passed on to the consumer.
RNRL has also accused RIL of trying to make super-normal profit of Rs 50,000 crore by selling gas at higher price.
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