Ambani row: Govt sticks to ‘national property’ line in SC

THE Centre on Monday told the Supreme Court that the terms of a Memorandum of Understanding (MoU) signed between Reliance Industries (RIL) and Reliance Natural Resources (RNRL) on supply of gas from the Krishna-Godavari basin violates the production sharing contract (PSC) between RIL and the government.      According to the now-famous MoU, which was signed in 2005 as part of the settlement which resulted in the demerger of Reliance, RIL is to supply 28 million standard cubic metres per day (mmscmd) of gas to RNRL at $2.34 per million British thermal unit (mmBtu). This price is at a 44% discount to a price of $4.20 per mmBtu fixed later by the government for sale of gas by RIL to some power and fertiliser companies. But the government reiterated on Monday that all the gas has to be sold according to the price formula and the gas utilisation policy approved by it.      The affidavit refuted RNRL's claims that the government is concerned only with its own share of gas under the PSC or the contract between the government and the consortium between RIL and Niko which operates the fields. RNRL has argued that the contractor, RIL, can sell its own share of gas to RNRL as per the order passed by the Bombay High Court.      "I respectfully submit that it is not correct to state that the government is entitled only to its share of the gas under the PSC and that this gas is outside the purview of the dispute in question (RIL vs RNRL over supply of KG gas) because all the gas extracted and saved continue to be the property of the Government of India and to be sold as per the price formula approved by the government and as per the gas utilisation policy," read the affidavit filed by SM Sundaram, the under secretary in the petroleum ministry.      "Contractor has no discretion over the price of gas and the sector to which he can supply the gas. Gas is a national resource and has to be utilised for developing the gas-based industries as per the government policies," the government said.      Seeking quashing of the high court order, the Centre said, "This (the order) was done on a wrong pre-supposition that there is a specified share of natural gas earmarked for RIL which is clearly negatived by the provisions of the PSC and the gas utilisation policy of the Government of India."      The high court, in its June 15 order, had said there appears to be a fixed quantity of 90% gas which is RIL's share and the company can do whatever it likes with that share of gas. The case will come up for hearing before a three-judge bench headed by Chief Justice KG Balakrishnan on October 20. The petitions of RIL, RNRL and the Centre have been listed before the bench. The ministry of petroleum and natural gas had moved apex court seeking quashing of the Bombay High Court order directing RIL to supply gas to RNRL at $2.34 per mmBtu. RIL had also moved the Supreme Court challenging the Bombay High Court order that asked it to supply 28 mmscmd of gas to RNRL at $2.34 per mmBtu.      RNRL, on the other hand, approached the apex court against a part of the Bombay high court judgement. RNRL had said, the high court while directing that the gas supply agreement ought to be amended should have given final and effective directions for amendment of such agreement to make it bankable.  PLAYING BY THE BOOK  The central govt has told the Supreme Court that all gas has to be sold as per price formula  To buttress its point, it has argued that the family pact is in violation of the PSC between RIL and the Centre  But RNRL maintains that RIL can sell its own share of gas, in line with the Bombay HC order