The Hindu Business Line : RIL may be allowed to sell gas to third parties

Pricing issue
The government-determined gas price may have a direct bearing on NTPC, which is also engaged in another legal battle with RIL on supply of gas.

Rahul Wadke

Mumbai, Jan. 12

The Division Bench of the Bombay High Court said on Monday that it could modify the injunction that prevents Reliance Industries from selling gas to third parties.

Mr Justice J.N. Patel, while hearing the arguments of Additional Solicitor-General, Mr Mohan Parasaran, said that the court could consider modifying the injunction after the Government, under an affidavit, clarifies the price at which gas from the Krishna-Godavari block would be sold to Government and its nominee companies like NTPC.

The Government is an intervener in the RIL-RNRL case and has sought to lift the injunction.

The court sought to know from Mr Parasaran the price at which state-owned NTPC will be buying gas from RIL. It also wanted to know, what the Government’s stand was under the crucial ‘Valuation of Natural Gas’ provision of the Production Sharing Contract that exists between RIL and the Government.

Mr Parasaran said NTPC has yet to approach the Government for approval of the price at which it wants to buy the gas. The Government will ensure a level playing field. The Government will file an affidavit on the “valuation of the natural gas” provision of the Production Sharing Contract on Tuesday.

The government-determined gas price may have a direct bearing on NTPC, which is also engaged in another legal battle with RIL on supply of gas. The RIL-RNRL gas sales agreement is based on the RIL-NTPC gas sales agreement.

The court also asked the Government to fix the gas price for all its public sector undertakings and it nominees. If not, gas sales to all the PSUs and their nominees will be taken as third-party sales. The court said that the Government can use gas bought from RIL for its own use in important sectors such as Railways and Defence.

The court said that there is an option for the Government to buy all the gas, after the developer RIL recovers the development cost of the KG basin gas field.

RIL position

RIL counsel Mr Harish Salve, in his submission, said that the Government share of gas cannot be determined until gas is produced. Gas pricing can only be determined by the Government and supply rests on the contractor, based on available quantity. Contractors and Government share of profit can only be determined after recovery of costs is completed. Recovery of costs is determined by quantity of gas available and sale of gas based on approved prices, he said.

Mr Parasaran, later talking to reporters, clarified that the court is considering lifting the injunction in the larger public interest.