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| MoU on gas supply never approved by board: RIL |
| BS Reporter / New Delhi Oct 07, 2009, 01:11 IST |
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Reliance Industries Ltd (RIL) has hit back at the Anil Dhirubhai Ambani Group (ADAG), claiming the Memorandum of Understanding (MoU), based on which ADAG was staking claim to gas supply was not binding on RIL.
The MoU was never presented to, or approved by RIL’s Board of Directors or shareholders, and is not legally binding upon RIL, it has said in an affidavit filed at the Supreme Court.
“If sanctity is granted to family MoUs of this kind, as corporate agreements, it would make complete mockery of all provisions relating to corporate governance,” the affidavit said.
Five RIL directors — Hital Meswani, Nikhil Meswani, D V Kapoor, H S Kohli and Y P Trivedi — have also filed affidavits in the Supreme Court stating they were not aware of the MoU and the company board never approved it. RIL executives said the MoU was a family arrangement not publicly known, while the demerger agreement was a corporate arrangement.
Reliance Natural Resources Ltd (RNRL), an ADAG company, seeks to obtain 28 million standard cubic metres a day of gas despite the fact that it has not built a single power plant since the demerger (of the companies) and the ADAG group owns just one gas plant which consumes a minuscule quantity of gas, RIL has said.
“RNRL seeks a below-market gas price of $2.34. The government disapproved this price in 2006, and has thereafter set a price of $ 4.20 applicable to all customers,” the affidavit said. As RNRL does not have existing plants capable of using the gas, it is necessarily seeking to trade in gas (which it is not entitled to do at all) and make enormous profits based on the below-market acquisition price of $2.34, RIL has claimed in the affidavit.
RIL has said that the “only way gas supplies could be made to RNRL (as demanded) would be if the government were to approve supply of this huge quantity of gas at below market prices – as is sought by RNRL. If RNRL’s demands were granted, the government would lose large sums of money in profit sharing, royalties and taxes. RNRL would reap a windfall at the expense of the government and RIL and its shareholders.”
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