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Since 1st March, 1999
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Ambani gas tiff in apex court

Mumbai, July 1: Reliance Industries has decided to file an appeal in the Supreme Court against a Bombay High Court order that directed the Mukesh Ambani-owned company to supply gas from the Krishna Godavari basin to Reliance Natural Resources Ltd (RNRL) at a discounted price of $2.34 per million British thermal unit (mBtu).

The move, which has been anticipated since the court passed the order on June 15, came after Anil Ambani’s RNRL accused the Rs 1,46,291-crore oil and gas giant of violating the court order.

RNRL fired the first salvo today by writing a letter to RIL and accusing it of “wantonly defying” the court order.

The court had given the two sides one month’s time to come up with a reworked gas supply agreement. The new deal was supposed to guarantee RNRL 28 million cubic metres of gas a day for the next 17 years at a rate that works out to a 45 per cent discount to the government-mandated price of $4.20 per mBtu.

In an angry response, RIL said, “We do not concur with your interpretation of the findings ... and the question of deliberately, wantonly or otherwise defying the implementation of the order of the high court does not arise.”

“We have been advised to and are filling appropriate proceedings in the Supreme Court against the judgment delivered by Bombay High Court,” RIL said.

Petroleum minister Murli Deora said yesterday that RIL could not sign a fresh agreement with RNRL without the government’s approval.

In its 20-page letter to Reliance, the Anil Ambani group company said the aspects of gas supply such as price, quantity and tenure to be incorporated in any agreement or any arrangement would not be subject to approval of the government of India.

After the court passed its order, RNRL had written to RIL inviting the company for talks. However, RIL has said it was still in the process of legal consultations.

In its reply, RIL said: “Our position remains we cannot sign any agreement without the approval of the government on price, quantity and tenure.”

RNRL has, however, maintained that the approval of the government is required only for the purpose of the valuation of the gas in order to determine the government’s share.

Under the production sharing contract that it signs with oil and gas prospectors, the government is entitled to profit gas — that is, a share of the profits after defraying the exploration and development costs.

RNRL argued that the gas supplies to it would come out of RIL’s entitlement and, therefore, did not need the government’s approval.

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