ID :
65908
Mon, 06/15/2009 - 23:37
Auther :
Shortlink :
https://www.oananews.org//node/65908
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HC orders RIL to give gas to Anil's RNRL cheaper @ 2.34 dlrs
Kapil Kelkar
Mumbai, Jun 15 (PTI) In the bitter corporate battle with
his elder brother, Anil Ambani got a major boost with the
Bombay High Court Monday ordering Mukesh-led Reliance
Industries Limited (RIL) to supply gas to other's group firm
at USD 2.34 per MBtu, 44 per cent lower than rates approved by
the government.
The high court ordered that Reliance Industries honour a
2005 family agreement to supply 28 million cubic meters per
day of gas from its Krishna-Godavari basin fields at USD 2.34
per mmBtu for 17 years to Reliance Natural Resources Ltd
(RNRL).
The final price would reduce the outgo for Anil's group
firm by about 11.8 billion dollars during the period of the
contract. As per USD 2.34 mBtu, the outgo for 17 years would
work out to 14.79 billion dollars compared to 26.55 billion
dollars on the basis of government-approved USD 4.2 mmBtu.
RNRL counsel Mahesh Jethmalani claimed victory. "Prima
facie it looks like we have won." By this order, RNRL will
have to pay USD 870.26 million for 28 mmcmd gas a year against
USD 1.56 billion claimed by RIL.
A division bench of Justice J N Patel and K K Tated said
the new pact should be as per the MoU signed between brothers.
The supply of gas has become a bone of contention between
the brothers who had signed a family settlement agreement in
June 2005 over the division of Reliance empire. But the fight
continued inside and outside the court on various issues.
RIL counsel Milind Sathe said he could not comment till
full judgement was available, but he added that filing appeal
in Supreme Court was one of the options.
Delivering the judgement in the long-pending and fiercely
fought dispute between the two brothers, the division bench
asked the two parties to arrive at the new agreement within a
month on the basis of memorandum of understanding between them
prior to their split in 2005.
The court has said that "parties should enter into a
suitable arrangement on the basis of quantity, tenure and
price as specified under the MoU either by renegotiating the
terms...or reverting back to Smt Kokilaben Dhirubhai Ambani
who has reserved her ability to intervene again if parties
fail to act upon the MoU".
If new agreement could not be worked out, aggrieved
party can move the Company Court "for modification of the
scheme of (Reliance) demerger", the court has said.
As per the MoU, RIL is to supply 28 MMSCMD of gas to
RNRL for power generation for 17 years at USD 2.34 per MMBtu.
RNRL had moved the court alleging that the master gas
supply agreement was signed when the concerned companies were
under the ownership of Mukesh Ambani group and was contrary to
the family settlement that was mediated by mother Kokilaben.
The court also specified that until new agreement was in
place, interim order which allowed RIL to sell gas as per
government's priority list would continue.
RIL sells about 15 mmcmd gas to power plants and 13 mmcmd
to fertilizer plants identified by the government at USD 4.20
per mmBtu.
Price of the gas was the most contentious issue between
RIL and RNRL. RIL's lawyer Harish Salve had argued that his
client cannot sell gas for less than USD 4.20 per MMBtu, which
was government-approved price.
Government too had stated during the hearing that it
would not allow sale of gas at a lesser rate.
However, the court held that production sharing contract
(PSC) between government and RIL (for exploration of Krishna
Godavari basin) did not say so.
"Mr Salve has not been able to draw our attention to any
part of PSC to show that government has prevented contractor
from sharing gas at a price lesser than the price fixed by
Empowered Group of Ministers out of contractor's entitlement
of 'cost gas' (gas to which RIL is entitled for recovering its
investment)," court said.
Court has further upheld RNRL's stand that under the
MoU, terms of RIL-NTPC contract (which was entered into before
demerger) would be a "general guidance" for RIL-RNRL contract.
PTI KRK
DEP
Mumbai, Jun 15 (PTI) In the bitter corporate battle with
his elder brother, Anil Ambani got a major boost with the
Bombay High Court Monday ordering Mukesh-led Reliance
Industries Limited (RIL) to supply gas to other's group firm
at USD 2.34 per MBtu, 44 per cent lower than rates approved by
the government.
The high court ordered that Reliance Industries honour a
2005 family agreement to supply 28 million cubic meters per
day of gas from its Krishna-Godavari basin fields at USD 2.34
per mmBtu for 17 years to Reliance Natural Resources Ltd
(RNRL).
The final price would reduce the outgo for Anil's group
firm by about 11.8 billion dollars during the period of the
contract. As per USD 2.34 mBtu, the outgo for 17 years would
work out to 14.79 billion dollars compared to 26.55 billion
dollars on the basis of government-approved USD 4.2 mmBtu.
RNRL counsel Mahesh Jethmalani claimed victory. "Prima
facie it looks like we have won." By this order, RNRL will
have to pay USD 870.26 million for 28 mmcmd gas a year against
USD 1.56 billion claimed by RIL.
A division bench of Justice J N Patel and K K Tated said
the new pact should be as per the MoU signed between brothers.
The supply of gas has become a bone of contention between
the brothers who had signed a family settlement agreement in
June 2005 over the division of Reliance empire. But the fight
continued inside and outside the court on various issues.
RIL counsel Milind Sathe said he could not comment till
full judgement was available, but he added that filing appeal
in Supreme Court was one of the options.
Delivering the judgement in the long-pending and fiercely
fought dispute between the two brothers, the division bench
asked the two parties to arrive at the new agreement within a
month on the basis of memorandum of understanding between them
prior to their split in 2005.
The court has said that "parties should enter into a
suitable arrangement on the basis of quantity, tenure and
price as specified under the MoU either by renegotiating the
terms...or reverting back to Smt Kokilaben Dhirubhai Ambani
who has reserved her ability to intervene again if parties
fail to act upon the MoU".
If new agreement could not be worked out, aggrieved
party can move the Company Court "for modification of the
scheme of (Reliance) demerger", the court has said.
As per the MoU, RIL is to supply 28 MMSCMD of gas to
RNRL for power generation for 17 years at USD 2.34 per MMBtu.
RNRL had moved the court alleging that the master gas
supply agreement was signed when the concerned companies were
under the ownership of Mukesh Ambani group and was contrary to
the family settlement that was mediated by mother Kokilaben.
The court also specified that until new agreement was in
place, interim order which allowed RIL to sell gas as per
government's priority list would continue.
RIL sells about 15 mmcmd gas to power plants and 13 mmcmd
to fertilizer plants identified by the government at USD 4.20
per mmBtu.
Price of the gas was the most contentious issue between
RIL and RNRL. RIL's lawyer Harish Salve had argued that his
client cannot sell gas for less than USD 4.20 per MMBtu, which
was government-approved price.
Government too had stated during the hearing that it
would not allow sale of gas at a lesser rate.
However, the court held that production sharing contract
(PSC) between government and RIL (for exploration of Krishna
Godavari basin) did not say so.
"Mr Salve has not been able to draw our attention to any
part of PSC to show that government has prevented contractor
from sharing gas at a price lesser than the price fixed by
Empowered Group of Ministers out of contractor's entitlement
of 'cost gas' (gas to which RIL is entitled for recovering its
investment)," court said.
Court has further upheld RNRL's stand that under the
MoU, terms of RIL-NTPC contract (which was entered into before
demerger) would be a "general guidance" for RIL-RNRL contract.
PTI KRK
DEP
