RNRL affidavit reiterates stand on RIL gas contract

Anil Ambani’s Reliance Natural Resources Ltd (RNRL) has told the Supreme Court through an affidavit that the government has no scope to alter the utilisation of gas or the fixation of its price with regard to the former’s disputed contract with Reliance Industries Ltd (RIL).

The government does not lose in revenue either, by RIL selling gas to RNRL at the earlier agreed price of $2.34 per mBtu (million British thermal unit), RNRL has said in replying to the petition filed by RIL which argues the contrary.

“RIL made a valid, binding and enforceable commitment in the year 2005 to supply gas on the agreed terms to RNRL. The said commitment and obligation of RIL is not affected in any manner by the gas utilisation policy announced by the government in the year 2008,” the affidavit said.

“RIL has complete marketing freedom for sale of gas within India. The marketing freedom would include within its scope the freedom to sell the gas on such terms and at such price that RIL deems fit and proper,” RNRL has said.

By the provisions of the production sharing contract signed by the government under the New Exploration Licensing Policy, the operators (in this case, RIL) have freedom to market gas in the domestic market on an arms-length basis. Government does not fix the price of gas. The role of government is to approve the valuation of gas for the purpose of determining government take, the affidavit said.

The two sides had approached the Supreme Court on a decision by the Bombay High Court on June 15, which said RIL should provide 28 million metric standard cubic metres a day (mmscmd) of gas to RNRL at $2.34 per mBtu and that both the parties should sign an agreement for this within a month.

RIL, however, is pleading it was only a contractor for the gas from the Krishna-Godavari basin’s D6 block and did not have the power to fix the price. The government has also petitioned to assert its right on pricing and distribution of natural gas. The apex court has decided to commence hearing this matter on October 20.