Anil Ambani group questions government’s role on gas pricing

January 15th, 2009 - 9:11 pm ICT by IANS  

Mumbai, Jan 15 (IANS) Anil Ambani-led Reliance Natural Resources Thursday pleaded before the Bombay High Court that the government had no right to fix the sale price of gas due to it from the hydrocarbon fields allotted to Mukesh Ambani’s Reliance Industries.“Under production sharing contracts, government’s role is limited to approving the gas value so as to determine its share of profits,” a senior company official said, quoting a counter-affidavit filed with the court on the dispute over the natural gas from the Krishna-Godavari basin.

“The production sharing contract does not give a right to government to fix actual sale price,” the counter-affidavit said, in response to the government’s contentions Tuesday.

The company’s counsels Ram Jethmalani and Mukul Rohatgi are likely to present their arguments Friday before the division bench of Justice J.N. Patel and Justice K.K. Tated.

Mohan Parasaran, the additional solicitor general of India, had said the gas from the Krishna-Godavari block would be available to all private and public sector firms at not less than $4.20 per million British thermal unit (mmBtu).

This was the price suggested by a high-powered ministerial group and agreed by the government, but the Anil Ambani group said the government cannot overturn contracts that are solemnly entered into by parties with an executive decision.

The state-run power utility NTPC is also fighting a legal battle with Reliance Industries for the supply of gas but at a lower price of $2.34 per mmBtu.

The government is an intervener in both the cases and wants the court to lift the ban on the sale of natural gas from the Krishna-Godavari basin, off the Andhra Pradesh coast, in the larger interest of energy-starved country.

The Anil Ambani group maintained that the gas price fixed by the ministerial committee was applicable to future contracts and recognised its legal inability in influencing court proceedings.

The counter-affidavit also said the government has no right as an intervener to level any evidence or file any affidavit and its role must be limited to assist the court in interpreting the production sharing contracts.

The affidavit further said the pact between the two groups on gas sale contracts was part of the de-merger scheme on account of the split between Mukesh and Anil Ambani that was approved by the court and within the government’s knowledge.

But Mukesh Ambani’s Reliance Industries had Wednesday denied any pact with Anil Ambani Group’s Reliance Natural Resources Ltd for the sale of natural gas from the Krishna-Godavari basin off the Andhra Pradesh coast.

Representing Reliance Industries, senior counsel Harish Salve told the court that a memorandum of understanding was signed with Reliance Energy, another company in the Anil Ambani group, for the Dadri power project in Uttar Pradesh.

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