Gas pricing: SC to examine policy, issues notices to Centre, RIL

The PIL sought the enforcement of relinquishment laws by which government should reclaim 80 percent of the KG Basin gas field that has not been utilised by Reliance.

Updated: Jul 29, 2013, 21:57 PM IST

New Delhi: Government's controversial decision to raise the price of natural gas reached the Supreme Court which today agreed to examine the matter.

Taking up a PIL filed by CPI MP Gurudas Dasgupta, the court issued notices to the Centre, Reliance Industries Ltd (RIL) and the Petroleum Minister Veerappa Moiley.

The bench headed by Chief Justice P Sathasivam said that the issue raised by the senior MP needs examination and the petition cannot be rejected at the initial stage.

The apex court also sought response from BP Exploration (Alpha) Limited, NIKO Resources Ltd and Ministry for Petroleum & Natural Gas on a PIL filed by CPI MP Gurudas Dasgupta who alleged that no due diligence was done by the government while increasing the price of natural gas.

The court directed the parties to file their response within four weeks and posted the matter for further hearing to September 6.

The MP pleaded for a slew of directions including review of Centre's decision to increase the price of natural gas from USD 4.2 per million British thermal unit (mbtu) to USD 8.4 mbtu from April 1, 2014.

Senior advocate Colin Gonsalves, appearing for Dasgupta, submitted that the decision to raise the price needs to be examined as the Petroleum Minister has overruled the opinion of senior officers of the ministry and his predecessor.

He also sought direction to RIL and NIKO to relinquish those areas of the KG basin forthwith as are recommended by CAG in its report and Centre to take possession of the area.

The petition alleged that Moily was stalling arbitration proceedings against the RIL to recover a penalty of USD 1 billion from the firm for allegedly violating contractual obligations in gas extraction in the Krishna-Godavari basin.

The petition pleaded for appointment of a third arbitrator (umpire) and expeditious completion of arbitration within 6 months.

Senior advocate Harish Salve, appearing for RIL, opposed the petition and said that there is no point in "junking" arbitration proceedings.

Dasgupta, in his petition, said that Moily was going against the recommendations of the Directorate General of Hydrocarbons (DGH) and the Comptroller and Auditor General (CAG) that the Mukesh Ambani-owned RIL should surrender a part of the gas block allotted to it and pay additional penalties.

"It is therefore most respectfully prayed that this Court may graciously be pleased to issue an order directing the respondents no. 1 to 3 (Centre, Moily, Petroleum Ministry), in addition to the order disallowing cost recovery of USD 1 illion, to additionally and forthwith disallow cost recovery for the period 2012-13 to the extent of USD 1.7 billion and for the period 2013-14 to the extent of USD 2.4 billion," the petition said.

It also said that CAG be asked to expeditiously complete financial audits of the project costs and Cabinet Secretary be directed to produce the entire record relating to the subject matter before the apex court.

The decision of the Petroleum Minister to overrule the CAG and the Director General, Hydrocarbon and not insist on relinquishment is illegal and malafide.

"All these decisions have been taken against the national interest and for collateral gain....The minister has made up his mind to overrule CAG and to provide windfall and unjustified gain to Reliance," the petition said.

Dasgupta submitted that he had filed a complaint to the PMO on the issue but the prime minister did not take any decision on it and that he was forced to approach the Supreme Court.