Stay on gas sale from KG basin needs to go: Govt to HC

The Union Government today made a strong case for lifting the stay on the sale of gas from the KG basin by Mukesh Ambani-run RIL to benefit the power and fertiliser sectors.

"We told the Bombay High Court that in the interest of the economy, and in view of the economic downturn, the stay should be lifted...It would benefit (the) power and fertiliser sectors," Additional Solicitor General Mohan Parasaran told PTI.

The Government is seeking to vacate the stay, he said. The High court, in May 2007, had stayed the sale of gas from the KG basin by Reliance Industries to third parties.

The Court was hearing today the dispute between Mukesh Ambani's RIL and younger brother Anil's Reliance Natural Resources Ltd over the gas sale agreement.

According to RIL lawyer Harish Salve, gas production could start in February.

The Central Government has intervened in the dispute. Parasaran also said that government will be filing an affidavit tomorrow, stating that the price of KG basin gas, determined by the Empowered Group of Ministers (EGoM), will be applicable to all the buyers -- government companies or private.

This statement is important as government-owned National Thermal Power Corporation (NTPC) too is involved in a legal dispute with RIL over the purchase of gas from the KG basin.

In the contract with NTPC -- which RIL says is not yet formalised -- the price is USD 2.34 per mBTU. But Parasaran today told the Court that according to an EGoM decision -- which came after the deal with NTPC -- the price of KG gas could not be less than $4.20 for all the buyers.