New Delhi: Mukesh Ambani Group firm RIL on Thursday faced some searching questions from the Supreme Court for its demand to raise the gas supply price to Anil Ambani's RNRL asking how will it serve the public interest.
"Was it not in the public interest that all should be supplied gas at the rate of USD 2.34 per mmBtu (Metric Million British Thermal Unit). If government says that the price of gas for all will be at USD 2.34 per mmBtu, will it not be in a public interest?", the court asked RIL.
"For making it from USD 2.34 to USD 4.20 per mmBtu you (RIL) are only the beneficiary and not the public. RIL is gaining and not the public. Is it in the public interest," a Bench comprising Chief Justice K G Balakrishnan and Justices R V Raveendran and P Sathasivam observed when RIL made submissions on the marketing rights of the gas from KG Basin.
The remarks of the Bench came on the sixth day of the hearing the dispute between RIL and RNRL relating to supply of gas from KG basin for which the two brothers Mukesh Ambani and Anil Ambani are engaged in a bitter fight.
RNRL is seeking gas from his brother's group
RIL at rates 44 percent lower than government-approved price.
RIL says it cannot honour the commitment made in the 2005
family agreement due to government's pricing and gas policies.
While senior advocate Harish Salve was advancing the
arguments on marketing rights of the gas for RIL, the Bench
said "if the gas is supplied at a lower price, the country is
going to be benefited".
"This is not an issue between the two brothers. The
issue is how the government could regulate the price of gas
arbitrarily and with this whose interest is being protected,"
the Bench asked.
Salve said a committee was set up to address the
public interest relating to fixation of gas supply price.
The senior advocate focussed his arguments to
buttress the stand that the gas supply at the rate of USD
2.34 per mmBtu would not be in interest of the RIL.
"I (RIL) will recover only the cost of production of
the gas. What I will lose is the interest and finance charge,"
Salve said adding though national interest was paramount, if
the price was fixed at USD 2.34 per mmBtu the RIL would be
pushed for nine years to make out cost recovery from the
venture. This would otherwise be only 4 to 5 years.
At this point, the Bench said, "If the cost of
production is to be recovered in five years, will it not be
the case that government gets the major chunk. Will it not
lead to the speedier recovery... Government will get profit
from gas, higher royalty".
Salve replied that if the cost recovery expands to
five years than RIL will not even have the taxable income.
Further, he elaborated that the gas at present was
being bought at USD 9 per mmBtu for RIL's Jamnagar plant in
Gujarat and even the state-owned PSU NTPC is procuring it at
that price.
Bureau Report
First Published: Thursday, October 29, 2009, 18:37