Business OpportunitiesRNRL accuses RIL of pushing complex price formula
Anil Ambani-led Reliance Natural Resources (RNRL) today alleged in the Supreme Court that Mukesh Ambani Group Reliance Industries (RIL) played a "fraud" by coming out with a complex formula on gas pricing to artificially enhance its rate.
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Describing the formula submitted by RIL as a "broad day light robbery", RNRL contended that gas was to be made available at a reasonable price for the consumption of domestic market.
Senior advocate Ram Jethmalani, appearing for the Anil Ambani Group, said the contract signed between RIL and RNRL envisaged that the gas was to be supplied at $2.34 per unit and government policy on gas utilisation and pricing was not applicable in the dispute.
"The role of the government is only to undertake the valuation of the gas and not to determine the price. Price is to be determined as per the contract between RIL and RNRL," he said before a Bench headed by Chief Justice K G Balakrishnan.
"The mischief arose when RIL produced a complex formula for valuation and did not mention the price in dollars or rupees but a formula that came under attack from the high powered economic advisory committee," the senior advocate said.
"Fraud has been committed in giving approval to the complex pricing policy," Jethmalani said before the Bench, also comprising Justices B Sudershan Reddy and P Sathasivam.
"The complex formula was put by the RIL to artificially raise the price to $4.20 per unit (from $2.34) which is contrary to public interest. We need cheap gas for power and fertilizer plants," he said.
The Ambani brothers are engaged in a high-voltage legal battle over the supply and price of the gas from KG basin.
While RNRL is seeking gas at a committed price of $2.34 per unit, RIL says it cannot honour the commitment made in the family agreement due to government"s pricing and gas policy.
RNRL said when the NTPC had invited global tender there were parties ready to supply gas at the rate of $3.18 per unit and now "how can can you fix the price at $4.20".
"People who were prepared at $3.18 have been knocked out," Jethmalani said adding that "the legal position is that you cannot create a policy on retrospective basis."
He said minutes of the Empowered Group of Ministers (EGoM) held on August 27 and September 12, 2007 also only speaks about the valuation of the gas and left out the issue of contract between RIL and NTPC, and RIL and RNRL.
Jethmalani said the contracts were not discussed in the EGoM as it felt the matters were pending in the court. RNRL, which has accused the government of siding with RIL, said if the Anil Ambani Group consented to the government becoming a party in the dispute then it has all rights to secure vital documents from the Ministry of Petroleum which has been denied.
Jethmalani said if RNRL consented to this, the government must agree to give documents sought by the company.