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| Declare Ambani MoU illegal, govt asks SC |
| BS Reporter / New Delhi Jul 19, 2009, 00:21 IST |
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It treats KG gas as personal property of the brothers, says SLP.
The government today joined the dispute that has simmered between Mukesh and Anil Ambani since 2006 over gas from the Krishna-Godavari basin when it filed a special leave petition (SLP) in the Supreme Court pleading that the memorandum of understanding between the two brothers be treated “illegal” and declared null and void as it treated the gas as a personal and family property of the signatories.
Anil Ambani-promoted Reliance Natural Resources Ltd (RNRL) has laid claim (through a family agreement prior to the group’s split in 2005) to 28 million standard cubic metres a day (mscmd) of gas from Mukesh Ambani’s Reliance Industries Ltd (RIL) at a price of $2.34 per million metric British thermal units (mmBtu) for 17 years.
 Murli Deora
Petroleum Minister
Petroleum ministry: RIL and RNRL cannot decide between themselves how the gas, which is a national asset and vests with the government of India, is to be distributed.
It is not the private property of RIL and RNRL and any understanding arrived at between them is not binding on the government. |
 Mukesh Ambani
Reliance Industries CMD
RIL: It is a contractor and not the owner of the gas. Selling gas to RNRL will expose RIL to the risk of breaching the provisions of its production-sharing contract with the government. Such allocation of gas to RNRL for a term of 17 years is in contravention of the gas utilisation policy of the government. |
 Anil Ambani
RNRL Chairman
RNRL: The family agreement says that RIL has to sell 28 mscmd of gas from the KG basin to RNRL at $2.34 per mmBtu. The agreement, which was upheld by the Bombay High Court on June 15, cannot be challenged by the government. The petroleum ministry wants to frustrate the demerger of the Ambani empire. |
RIL, on its part, has said that the agreement is not binding as it is only a “contractor” for the KG basin gas and has added that this price was rejected by the petroleum ministry which has fixed a higher price of $4.2 mmBtu.
The family agreement was upheld by the Bombay High Court on June 15. However, RIL made an appeal into the Supreme Court against that order. The Supreme Court will hear the matter on July 20.
The government’s stand is expected to play a crucial role in this legal battle. The SLP is in sync with RIL which has maintained that the gas is not its property and it is only a contractor.
“The two respondents (RIL and RNRL) have used natural gas whose ownership vests with the government of India as their private property. This is against all canons of law,” the government said in its petition. “The private MoU cannot affect the sovereign rights of the Union of India.”
RIL officials refused to comment. But sources in RNRL, which also filed an affidavit today in the Supreme Court, said that the government did not have any locus standi to challenge any part of the MoU, and the entire attempt of the ministry of petroleum was to frustrate the scheme of demerger of the Reliance empire.
This, they maintained, would help RIL to ease out of the binding commitment to sell gas to RNRL. The government said in the SLP that the current and projected availability of gas from the KG Basin, if properly used, will promote the country’s industrialisation. If the MoU comes into effect, all the gas will be owned by the two companies and would be utilised at their discretion. “Obviously, the pressing needs of the priority sectors of the national economy cannot be allowed to be held hostage to the benevolence and mercy of the two respondents,” it said. To this, an RNRL executive said it required gas for power generation which is a priority sector for the government under the utilisation policy.
On the issue of price, the government petition said: “The gas has to be utilised in terms of the gas utilisation policy formulated by the government. The gas has to be sold at a price obtained from the pricing formula/basis approved by the government.” In effect, the government is against the price of $2.34 per mmBtu which was upheld by the Bombay High Court on June 15.
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