New Delhi: Mukesh Ambani-led RIL on Tuesday told
the Supreme Court that it cannot supply gas to Anil Ambani
group firm RNRL in the absence of power plants to consume the fuel and apprehended that the same would be traded to make "enormous profits."
Replying to RNRL's petition seeking Supreme Court to
direct RIL to supply gas as already ordered by the Bombay High Court, RIL said the Anil Ambani group firm "does not have a single power plant since the demerger (of the Reliance empire) and the ADAG owns just one gas-based plant."
"RNRL does not have existing plants capable of using the
gas and it is necessarily seeking to trade in gas over (which
it is not entitled to do at all) and make enormous profits
based on the below market acquisition price of USD 2.34 per
mmBtu," RIL said in its affidavit.
RNRL is demanding 28 mmscmd of gas from RIL for 17 years
at a price of USD 2.34 per mmBtu, which is 44 per cent lower
than the government-approved rate.
Apprehending that the gas could only be used by RNRL to
trade, RIL said trading in gas is also barred by the
government policy, under which KG-D6 gas can only be sold to
priority end users which have existing facilities to consume
gas and users identified by the government.
RIL also noted that while the demand for supply was 17
years, the fact was that the life of production from KG-D6
fields was only 12 years.
Stating that there was an irreconcilable conflict between
what RNRL demands and the currrent government policy, RIL said
that the only way gas supplies could be made to the Anil
Ambani company would be if the government were to approve
supply of this huge quantity of gas at below market prices.
"If RNRL's demands were granted, the government would
lose large sums of money in profit making, royalities and
taxes. RNRL would reap a windfall at the expenses of the
government and RIL and its shareholders," the application
stated.
It submitted that there was no obligation that entitles
RNRL to any relief as the Scheme of Arrangement pursuant to
which RNRL and other companies were demerged from RIL provided
that there would be "suitable arrangement" for the supply of
gas for power generation and RIL had anticipated use of gas
for power generation.
According to RIL, the scheme didnot provide the terms on
which supply of gas would be made and if gas is to be supplied
it has to be under arrangements suitable to both the parties.
The MoU was not binding upon RIL as the same was not
approved by RIL's board of directors or shareholders, the
affidavit stated, adding that "if sanctity is granted to
family MoU's of this kind, as corporate agreements, it would
make a complete mockery of all the provisions relating to
corporate governance".
RNRL's petitions and those filed by RIL and the
government are to come up for final hearing before the Supreme
Court from October 20.
Flaying RNRL for claims that RIL was reneging on its
obligations, the Mukesh Ambani-led firm submitted that it
never assumed any obligation to subsidise RNRL at its expense
or that of the government or its shareholders and violate the
government policies.
Besides, RNRL was seeking to mislead the court by making
blatantly false allegation that RIL stands to make a windfall
profit of Rs 50,000 crore.
RIL said it was, in fact, RNRL that seeks "to make
windfall profits by buying gas at the below market price of
USD 2.34 per mmBtu and selling it at higher prices."
Bureau Report
First Published: Wednesday, October 07, 2009, 00:47