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RIL influenced Oil Ministry to hike gas price: RNRL

RNRL told SC that RIL had full marketing freedom for Krishna-Godavari gas and accused it of influencing Oil Ministry officials in getting price hiked for NTPC.

New Delhi: Reliance Natural Resources Ltd (RNRL) told the Supreme Court Thursday that Reliance Industries Ltd (RIL) had the full marketing freedom for Krishna-Godavari gas and accused it of influencing oil ministry officials in getting the price hiked for state-run NTPC.
The company also sought to drive home the point that the government`s contract with RIL was to share the production of gas from Krishna-Godavari basin with the option to take such a share either in cash or kind.

"NTPC floated an international tender and because RIL bid for $2.34 per unit, it won the contract. Then it persuaded some corrupt secretary in the ministry to raise it," RNRL counsel Ram Jethmalani said.

"This makes nonsense of the whole bidding process -- another saga of corruption," the counsel told the three-member bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam.

"When a price has been discovered through a transparent bidding process, nothing further needs to be done, there is no need for the government to intervene," he said.

The court is hearing the dispute over the supply of 28 million units of gas for 17 years at $2.34 per unit to Anil Ambani-led RNRL from the gas fields off the Andhra Pradesh coast, awarded to Mukesh Ambani`s RIL.

The price, tenure and quantity were based on a family re-organisation pact of 2005, but RIL subsequently said it could only sell the gas for $4.20 per unit, as this was the price, the company claimed, fixed by the government.

During his arguments, Jethmalani also refuted the oil ministry`s contention that it was entitled to approve or disapprove the price of gas between two private parties, using public interest as a reason.

"Today, the law is that the state is not entitled to exercise even its contractual agreement in an arbitrary manner," he said, adding: "Nothing is relevant, if the terms of the contract is clear."

The RNRL counsel also sought to draw the court`s attention to finer nuances of the contract between the government and RIL and said the same was to share production and not revenues.

Thus, he added, valuation had nothing to do with the price of gas and the oil ministry had the option of either taking the proceeds in cash or kind after notifying the contractor -- which, in this case, is RIL.

Jethmalani also added an emotional touch to his arguments and told the court: "See, what the younger brother is asking from the elder brother -- an amount less than 0.1 percent of the wealth."

He elaborated further adding that RIL was left with exploration rights of 400,000 sq km of territorial waters along various coastal states, while the area of the disputed Krishna-Godavari basin is merely 7,000 sq km.

The RNRL counsel said the younger Ambani sibling has been left fighting for his share of 28 million units per day, while the older Mukesh has got a find of 120 million units a day in various wells.

He went on to add that the higher price of gas, as being sought by RIL, will seek to further enrich the already profitable company by a windfall additional profit of Rs.50,000 crore at the cost of the common man who will end up paying a higher price for power.

Earlier, minutes before Additional Solicitor General Vivek Tankha was to wind up his argument on behalf of the oil ministry, Solicitor General Gopal Subramanium sought to contradict the perception that the government has jettisoned NTPC`s interest in its legal battle with RIL.

"The government in its application has clarified that it has not jettisoned the interest of NTPC. The NTPC suit in the Bombay High Court, seeking supply of gas at $2.34 per unit, should not be prejudiced in any manner," said Subramanium.

Responding to the solicitor general`s statement, RIL counsel Harish Salve said that if NTPC proved it has a concluded contract for the gas supply, "I am bound to supply the gas at whatever price".

RNRL counsel Mukul Rohatgi reacted, saying: "I know the solicitor general is a fair person. Till he made the statement, it was the perception that the government believes the price of $2.34 is suspect."


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