Govt to gain Rs 16,000 cr from KG gas sale: RIL

The government is likely to gain Rs 16,000 crore from the sale of gas from Reliance Industries’ Krishna Godavari basin at $4.20 per mmbtu (unit of natural gas) and not lose Rs 30,000 crore, as suggested by Reliance Natural Resources (RNRL), argued RIL’s counsel before the Bombay High Court on Thursday. In the course of arguments before the division bench comprising Justices JN Patel and KK Tated on Thursday, the RIL counsel Harish Salve said the government will register the gains over 11 years, which is the estimated life span of the gas reserves in the KG basin’s D6 block. The numbers assume that state-owned NTPC pays $4.20 per mmbtu and not $2.34. The counsel said the memorandum of understanding between the Ambani brothers, containing the terms under which the Reliance empire was divided in 2005, did not mention the sale price of $2.34 per mmbtu, as sought by RNRL. The gas supply agreement between the Ambani brothers was based on the terms and conditions specified in a contract between RIL and NTPC. While RNRL maintains that it supplied gas to the Dadri power plant for 17 years at $2.34 per mmbtu (the price at which RIL won the bid to supply gas to NTPC), RIL contends that the sale price is subject to the government’s approval. RIL and NTPC are fighting a separate case on gas pricing. RNRL counsel Ram Jethmalani had argued earlier this week that the government’s decision not to allow NTPC, a government-owned company, to buy the KG gas for less than $4.2 per mm Btu was a “scam” amounting to Rs 30,000 crore. Meanwhile, the RNRL counsel Mukul Rohatgi told the court that the money which Reliance Energy (REL), a part of the Anil Ambani group, raised through external commercial borrowings was “sent back” after being invested in debt-funds for some time. Mr Rohatgi argued that this money — Rs 2000 crore — was not meant for the Dadri power project. The RBI had asked REL to pay Rs 125 crore for compounding (settlement) of what REL perceived to be a “technical offence”, Mr Rohatgi said, adding that the compounding order was opposed by REL. Mr Salve said earlier that as the Anil Ambani group raised these funds, it could not blame RIL for not giving a “bankable” gas sale agreement and causing a delay in the Dadri project. RNRL has repeatedly alleged that it could not raise funds for Dadri in absence of a “bankable” agreement. RIL will submit the lease papers signed with the government for the KG Basin gas, the government’s letter approving the pricing formula and the latest project development plans, to the High Court. RNRL, on the other hand, is likely to submit the details it provided to the RBI for the ECB for the court’s consideration.