The government has said that the price at which Reliance Industries supplies natural gas to some power plants of state-owned utility NTPC would have to be approved by it. That price, $2.34 per million British Thermal units (mmBtu), was arrived at through a competitive bidding in 2003. “The price offered by the contractor (RIL) to NTPC will require scrutiny and approval of the government under the PSC,” said the ministry of petroleum and natural gas in its affidavit.
The affidavit did not say if the price of $2.34 per mmBtu would eventually be approved. “The central government will take an appropriate decision in the case of NTPC as and when a need arises. Such a decision based on public interest, if in favour of NTPC, cannot be termed as discriminatory or arbitrary,” was all that the affidavit had to say.
The document clearly contradicted NTPC’s stand. The chairman and managing director of the PSU, RS Sharma, had written a letter on August 28, 2009, to power secretary H Brahma saying, “NTPC reiterates its position that RIL did not mention in its bid that price of gas shall be subject to approval of the government.” Both NTPC and RIL are fighting a legal battle in the Bombay High Court on whether the two companies had signed a final contract following the bidding.
In 2007, the government fixed a price of $4.20 per mmBtu for sale of natural gas from the Krishna-Godavari basin to some power and fertiliser companies.
The price of $2.34 per mmBtu and the question of government approval is at the heart of the epic legal battle between Anil Ambani’s Reliance Natural Resources (RNRL) and Mukesh Ambani’s Reliance Industries (RIL). The famous memorandum of understanding signed between the estranged Ambani brothers provides for supply of gas at the price no greater than price payable to NTPC. RNRL has argued that RIL is free to sell gas to customers without the government approval. RIL contests this, saying the price needs the sanction of the Union government.
The government in its affidavit seemed to support the RIL position. “The rights and obligations of NTPC and RIL can not be regarded as similar in status to the private arrangement as in the case of RIL and RNRL, as NTPC is not only a PSU but the process involved for price determination in the case of NTPC gas was by international competitive bidding.”
It further said: “the central government has on the one hand, left NTPC to establish its rights in the pending suit in the Bomaby High Court, on the other hand, has not foreclosed any options available under the PSC. However, such a decision would be taken by the competent authority having regard to the character of the PSU and other relevant circumstances having a bearing on the public interest.”
Besides the NPTC affidavit, Mukul Rohtagi, another legal eagle representing RNRL continued his arguments on Wednesday. Mr Rohtagi claimed a price of $4.20 per mmBtu would allow ‘profiteering’ by RIL, claims echoing those made by Anil Ambani. He also claimed that sale at $2.34 per mmBtu would not a losing proposition for RIL
The affidavit did not say if the price of $2.34 per mmBtu would eventually be approved. “The central government will take an appropriate decision in the case of NTPC as and when a need arises. Such a decision based on public interest, if in favour of NTPC, cannot be termed as discriminatory or arbitrary,” was all that the affidavit had to say.
The document clearly contradicted NTPC’s stand. The chairman and managing director of the PSU, RS Sharma, had written a letter on August 28, 2009, to power secretary H Brahma saying, “NTPC reiterates its position that RIL did not mention in its bid that price of gas shall be subject to approval of the government.” Both NTPC and RIL are fighting a legal battle in the Bombay High Court on whether the two companies had signed a final contract following the bidding.
In 2007, the government fixed a price of $4.20 per mmBtu for sale of natural gas from the Krishna-Godavari basin to some power and fertiliser companies.
The price of $2.34 per mmBtu and the question of government approval is at the heart of the epic legal battle between Anil Ambani’s Reliance Natural Resources (RNRL) and Mukesh Ambani’s Reliance Industries (RIL). The famous memorandum of understanding signed between the estranged Ambani brothers provides for supply of gas at the price no greater than price payable to NTPC. RNRL has argued that RIL is free to sell gas to customers without the government approval. RIL contests this, saying the price needs the sanction of the Union government.
The government in its affidavit seemed to support the RIL position. “The rights and obligations of NTPC and RIL can not be regarded as similar in status to the private arrangement as in the case of RIL and RNRL, as NTPC is not only a PSU but the process involved for price determination in the case of NTPC gas was by international competitive bidding.”
It further said: “the central government has on the one hand, left NTPC to establish its rights in the pending suit in the Bomaby High Court, on the other hand, has not foreclosed any options available under the PSC. However, such a decision would be taken by the competent authority having regard to the character of the PSU and other relevant circumstances having a bearing on the public interest.”
Besides the NPTC affidavit, Mukul Rohtagi, another legal eagle representing RNRL continued his arguments on Wednesday. Mr Rohtagi claimed a price of $4.20 per mmBtu would allow ‘profiteering’ by RIL, claims echoing those made by Anil Ambani. He also claimed that sale at $2.34 per mmBtu would not a losing proposition for RIL
Source: Economic Times
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