Govt stand differs on pricing of RIL gas to RNRL, NTPC
The government has adopted a dual stand on gas sales from Reliance Industries (RIL’s) Krishna Godavari (KG) basin to Reliance Natural Resources (RNRL) and the sales to its own company NTPC.
By Piyush Pandey, |
MUMBAI: The government has adopted a dual stand on gas sales from Reliance Industries (RIL���s) Krishna Godavari (KG) basin to Reliance Natural Resources (RNRL) and the sales to its own company NTPC.
In a rejoinder filed in the Bombay High Court for the ongoing RNRL-RIL case seeking vacation of the stay on Mukesh Ambani-run Reliance Industries for selling gas to third parties, the government has said that the price fixed in the year 2004 cannot be taken as the basis for the prevailing price and it has no approval of the government.
The same rejoinder also states that as far as NTPC-RIL case is concerned, the government is only concerned with the valuation of the gas sold at which government entitlements, royalty, profit petroleum and taxes will be determined.
This rejoinder was filed with respect to RNRL���s reply stating that government has no role in the gas settlement dispute between RIL and RNRL. The government had earlier filed an application for being a party to the case between RIL and RNRL on April 28.
The government���s rejoinder raises serious doubts over NTPC getting gas at $2.34 per mmbtu from RIL because in 2006, the government had rejected RIL���s proposal to sell gas to RNRL at price of $2.34 per mmbtu. This was the price at which RIL agreed to sell gas to NTPC through an international competitive bidding (ICB) in 2004.
The government rejected RIL-RNRL gas deal stating it was not an arms length contract and the price was not arrived through ICB.
In 2007, the government approved a benchmark price for sale of gas at $4.2 per mmbtu. NTPC will lose close to Rs 20,000 crore ($5 billion) if it has to buy gas at government approved price of $4.2 per mmbtu against $2.34 per mmbtu at which it entered into contract with RIL through ICB in 2004. RIL-NTPC case in Mumbai High Court is not over pricing but over the cap on liability clause.
The RNRL-RIL case will come up for hearing on July 22 and the Bombay High Court has maintained status quo in the long-drawn out legal battle till then.
In a rejoinder filed in the Bombay High Court for the ongoing RNRL-RIL case seeking vacation of the stay on Mukesh Ambani-run Reliance Industries for selling gas to third parties, the government has said that the price fixed in the year 2004 cannot be taken as the basis for the prevailing price and it has no approval of the government.
The same rejoinder also states that as far as NTPC-RIL case is concerned, the government is only concerned with the valuation of the gas sold at which government entitlements, royalty, profit petroleum and taxes will be determined.
This rejoinder was filed with respect to RNRL���s reply stating that government has no role in the gas settlement dispute between RIL and RNRL. The government had earlier filed an application for being a party to the case between RIL and RNRL on April 28.
The government���s rejoinder raises serious doubts over NTPC getting gas at $2.34 per mmbtu from RIL because in 2006, the government had rejected RIL���s proposal to sell gas to RNRL at price of $2.34 per mmbtu. This was the price at which RIL agreed to sell gas to NTPC through an international competitive bidding (ICB) in 2004.
The government rejected RIL-RNRL gas deal stating it was not an arms length contract and the price was not arrived through ICB.
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The rejoinder, a copy of which is with ET, states that, ���The definition of arms length price under the PSC is relevant in this regard and also the fact that the contractor as per the article 21.6.1 of the PSC shall endeavour to sell all natural gas produced and saved from the contract area at arms length prices to the benefits of the parties to the contract.���In 2007, the government approved a benchmark price for sale of gas at $4.2 per mmbtu. NTPC will lose close to Rs 20,000 crore ($5 billion) if it has to buy gas at government approved price of $4.2 per mmbtu against $2.34 per mmbtu at which it entered into contract with RIL through ICB in 2004. RIL-NTPC case in Mumbai High Court is not over pricing but over the cap on liability clause.
The RNRL-RIL case will come up for hearing on July 22 and the Bombay High Court has maintained status quo in the long-drawn out legal battle till then.
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