New Delhi: Mukesh Ambani group firm RIL told the Supreme Court that the government will lose Rs 22,600 crore in revenues if RNRL was supplied gas at a price of USD 2.34 per mmBtu, while the Anil Ambani group firm will make a windfall profit of Rs 23,800 crore.
In its reply to the RNRL's SLP, RIL said that RNRL was
"misleading" the court by alleging that it will gain Rs 50,000
crore as the difference in revenue between the government
approved price of USD 4.2 and USD 2.34 for 28 MMSCMD of gas
over 17 years.
In the affidavit, RIL said that the life of gas field was
12 years and Anil Ambani group can receive gas for maximum of
eight years as it would take a minimum of three years to set
up the power plant at Dadri in Uttar Pradesh.
"The difference in net revenue (net of capex and opex)
adjusted for eight years (even on the erroneous basis of RNRL)
works out to be approximately Rs 23,800 crore," it stated.
Out of this Rs 23,800 crore, approximately 95 per cent
(Rs 22,000 crore), which included royalty, taxes and profit
share, would be lost by the government and around 5 percent
i.e, Rs 1,200 crore would be lost by contractors (RIL and
NIKO).
"If RIL were to sell 28MMSCMD of gas to RNRL at USD 2,34
mmBtu for 17 years while the government adopted USD 4.2 for
purpose of valuation (for tax and other levies), RIL would
incur a cash loss of Rs 50,000 crore. This would result in
RIL's not even recovering its investments," it further added.
"... all the actions of RNRL are clearly motivated by
commercial greed, with the goal of pocketing trading profits
(by selling gas to the power plants of Releiance Energy Ltd
and RPPL) far in excess of the alleged Rs 50,000 crore without
making any effort or investment, all to the detriment of the
government and the common man," RIL said in its reply.
Refuting RNRL's stand, RIL said that the gas supply under
the MoU of 2005 was conditional to the government approval and
the government had in July 2006 rejected the price of USD 2.34
per mmBtu as not being on arms length.
Besides, RIL reiterated that the family MoU was not
binding on it as its board had not approved it.
"RIL's shareholders and creditors knew nothing of the
contents of the MoU. The MoU was not referred to in the scheme
(demerger Reliance empire) document. Nor is it referred to in
the explanatory circulars. When the Bombay High Court
sanctioned the scheme, it knew nothing of the contents of the
MoU," RIL stated.
Denying RNRL's argument that the high court had
sanctioned the entire demerger scheme, including its
formation, RIL said that the demerger was not in any way
linked to the gas-supply agreement.
RIL further argued that if RNRL's demands for gas supply
were acceded, then it require RIL to breach the Production
Sharing Contract which stipulated that the contractor can sell
gas only at government approved price.
"One of the consequences of the breach of the PSC could
be its termination, and any such breach would thus place in
jeopardy the entire investment made by RIL," the affidavit
stated, adding that RIL being the contractor to the government
had an obligation to sell all the gas at arms length price and
can't create a preferential class of customers.
Meanwhile, RNRL shareholders and RIL shareholders have
also moved the apex court seeking to be made parties in the
gas supply dispute between Ambani brothers.
A Supreme Court three-judge bench will commence hearing
in the gas supply dispute case on October 20.
Bureau Report
First Published: Sunday, October 11, 2009, 20:30