RIL's KG-D6 licences now face legal heat

RIL, Niko Resources operate block in Krishna Godawari basin under a production sharing contract with govt

Common Cause, a citizen’s group, has filed a public interest suit seeking cancellation of the Mukesh Ambani-led Reliance Industries’ (RIL) lease for the D6 gas block in the Krishna-Godavari basin (KG-D6) or an “appropriate penalty because of RIL’s failure in adhering to their commitments and deliberate underproduction”.

RIL and Niko Resources operate the block in the Krishna-Godavari basin under a production-sharing contract with the government. The PIL filed by Common Cause comes weeks after Communist Party of India leader Gurudas Dasgupta moved the Supreme Court for a review on the gas pricing decision from $4.2 per million British thermal unit (mBtu) to more than $8 an mBtu based on the Rangarajan formula.

Currently, the operators produce 14 million standard cubic metres a day (mscmd) of gas though they had projected around 80 mscmd. The PIL also seeks an investigation by a special investigative team or the Central Bureau of Investigation (CBI) under the supervision of the apex court into the “collusion between RIL and the political establishment”.

Reiterating the demand by Dasgupta, the PIL demands a probe on issues such as not taking any action against RIL for hoarding gas, increasing the price to $4.2 an mBtu by ignoring a subsisting bid by RIL to NTPC for 17 years at $2.34 an mBtu, doubling the gas price to $8.4 per mBtu, giving retrospective tax benefit, and not insisting on relinquishments of area from RIL.

A similar petition filed last year had led to cancellation of all the 122 unified access service licences issued to telecom majors in January 2008 by former telecom minister A Raja.

The petitioners include former Cabinet secretary T S R Subramanian, former chief of naval staff L Ramdas and former secretary of the Government of India Ramaswamy R Iyer. The Supreme Court had asked the government and RIL to respond to Dasgupta’s PIL on September 6. The central government, petroleum minister M Veerappa Moily, petroleum ministry, RIL, Niko and BP are among the respondents in Dasgupta’s PIL. 

“Today, the state has virtually allowed a private contractor (RIL) to act as an owner of the said resource, making a mockery of the people’s right and public interest,” said lawyer Prashant Bhushan who represents the petitioners.  

This fresh petition is divided into five important issues: hoarding of gas by RIL, gold plating of expenditure by RIL, non-relinquishment of area by RIL, mala fide doubling of gas price and retrospective tax concession. According to the petitioner, the Comptroller and Auditor General exposing RIL expenditure issues no action was taken against them.