Govt policy curtailing freedom to sell gas: RIL

SC BENCH SAYS MOU APPEARS TO BE AT THE CORE OF THE DISPUTE  RELIANCE Industries on Thursday belittled the importance of the memorandum of understanding (MoU) signed between members of the Ambani family and said the government's gas utilisation policy had taken away the company's freedom to market gas.      RIL's lawyer Harish Salve resumed his arguments on Thursday and as on previous days was peppered by questions from the justices on various aspects of the complex case.      The MoU appeared to be at the core of the dispute, the Supreme Court said on Thursday and asked the Mukesh Ambani led-firm to show how it is not binding on the company. "You (RIL) show us how MoU is not binding on you. Forget about PSC (production sharing contract), which deals with your agreement with the government and not RNRL. It's ancillary to the core issue of MoU. PSC was signed prior to the MoU. Were its contents not known when the MoU was signed subsequently," asked a bench comprising Chief Justice KG Balakrishnan and Justices RV Raveendran and P Sathasivam to RIL's counsel Harish Salve.      Justice Raveendran observed: "Is de-merger not a consequence of the MoU? Would demerger have happened if there was no MoU?"      Mr Salve's response was robust. "The MoU is not worth the paper on which it is written as far as RIL is concerned," he said. The only agreement binding on the company was the scheme of demerger approved by the board and later by the Bombay High Court.      According to the MoU signed in 2005, as part of a settlement on division of the Reliance empire, RIL is to supply 28 million standard cubic metres per day (mmscmd) of gas to Anil Ambani's Reliance Natural Resources (RNRL) at $2.34 per million British thermal unit (mmBtu). This price is at a 44% discount to the price of $4.20 per mmBtu fixed later by the government for sale of gas by RIL to some power and fertiliser companies.      Mr Salve said the government's gas utilisation policy had taken away RIL's right to market the gas. In response to a question, he said the gas policy had not been notified and that the government conveyed its instructions in the form of directions to the contractor, or RIL.      RIL's freedom to market the gas, or the lack of it, is potentially of the greatest importance since one of the main components of RNRL's case is that the Mukesh Ambani-led firm has the right to sell gas to it at a price different from that set by the government.      A sidelight of the day's proceedings was a clash between Mukul Rohtagi, RNRL's lawyer, and Mr Salve over the ownership of India's longest gas transportation from Kakinada in Andhra Pradesh to Bharuch in Gujarat. Mr Rohtagi said: "We have learnt that the pipeline is sold to Mukesh Ambani. RIL should answer who owns it."      Mr Salve said this was not relevant to the case. "Even if it belongs to Mukesh Ambani, how does it make a difference here (to the present case). If it makes you (RNRL) happy, I will say Mukesh Ambani owns it. But most of your information is based on media gossip".