RIL denies it got favours from govt

Says CAG report on KG basin oil fields 'inquisitorial' and based on 'incomplete information'

Reliance Industries Ltd (RIL) on Wednesday assailed charges of government favouritism levelled against it by Communist Party of India (Marxist) leader Gurudas Dasgupta and non-profit organisation Common Cause. The court will take up the matter again next week.

Speaking before the Supreme Court, the company‘s counsel said the Comptroller and Auditor General’s report on the Krishna-Godavari basin oil fields was “inquisitorial” and based on “incomplete information”.

Explaining the process of oil discovery and development, RIL counsel Harish Salve said those involved in exploring took huge risks and the exercise was “fraught with uncertainty”. In India, the success rate for exploration was one in 10. Also, gas pressure varied in the same well, as well as across neighbouring ones, and the pressure dropped as gas was taken out, Salve said.

All these factors, along with other technical ones, should be taken into account while deciding the gas price, he said. “Reckless allegations of gold-plating and hoarding” were based on wrong calculations by those who didn’t understand the technical aspects, Salve said, adding not a single power plant was run on Reliance gas, as alleged; it supplied gas only to fertiliser units.

Countering the contentions of Dasgupta and others that since the cost of exploration of the D1-D3 wells had been recovered, the entire profit-sharing contract with RIL should be scrapped, Salve said this could only be described as a “punishment”.

The profit-sharing contract didn’t envisage a price based on costs; it was based on a market-determined price. The fiscal model of the PSC would be unworkable. He asserted before a bench headed by Justice B S Chauhan this case is not a challenge to the increase in price of gas to prevent the consumer from being affected; it is rather a case for denying price increase to the contractor in KG D6 alone. These petitions, argued with "high rhetoric" was to foreclose the arbitration and forcing the government to terminate the contract under orders of the court. The arguments will continue next week.