Govt: ADAG's charges all gas and a judicial impropriety

Terming the advertising campaign by the Anil Dhirubhai Ambani Group (ADAG) ‘most unfortunate’, the government in a statement released today said the group’s allegations were incorrect. It advised the group to exercise “restraint in the matter of projection of facts, as well as inferences”, especially since the matter was before the Supreme Court.

A strongly worded government note said that in view of the fact that the matter was sub-judice, the government issued “the limited clarification” so that there is no element of public misinformation. “The government is committed to upholding the rule of law. It cannot enter into needless and unnecessary controversies,” said the note.

Following the government response, J P Chalasani, CEO of Reliance Power (an ADAG group company), in a conference call stuck to his group’s stand and said the newspaper advertisements put out by ADAG were correct.

The government response was vetted by Solicitor General Gopal Subramanium after an informal ministerial group discussed the matter last evening, said a senior official. The group comprises petroleum minister Murli Deora, power minister Sushilkumar Shinde, law minister Veerappa Moily and finance minister Pranab Mukherjee.

On ADAG’s allegation that the ministry of petroleum is seeking to cause a loss to NTPC, the release stated that the ministry “is committed to protect the interests of NTPC by all means”. But Chalasani, in his response, sought to again raise the issue by stating that “we (the group) trust the petroleum ministry will take all steps to now ensure that NTPC gets 12 million standard cubic metres a day from RIL at a price of $2.34/mbtu for 17 years for its Kawas & Gandhar expansion projects”. ADAG’s claim to D6 gas at $2.34 is linked to the NTPC price.

Countering the Anil Ambani group’s criticism on loss of revenue, the government note said, “An allegation has been made that in the contract of the KG-D6 Project, the government would get only Rs 500 crore as against the contractor’s take of Rs 50,000 crore. This allegation is incorrect. Government expects to realise about Rs 84,000 crore. The recovery of the government would increase towards the latter part of the project.”

The government has also defended the revised capex amount of the project. “In November 2004, the estimated capital expenditure was $2.45 billion, which was revised in December 2006 to $8.83 billion. The said increase has taken place on account of various factors, including increase in reserves by over two and half times, production facilities by three times, peak production by two times, increase in number of wells, field life and inflation in equipment and services industry,” it said.

While ADAG has been claiming that the gas price of $4.2 is high, the government today said the price formula is based on the principle of ‘arm’s length’ and in accordance with the provisions of the production sharing contract. The price formula was approved on September 12, 2007, which leads to a price of $4.2 per mBtu. The formula is fixed for five years.