The Hindu Business Line : Govt can earn more if a higher price is set for KG gas, says Reliance counsel

Mumbai, Jan. 22 The Union Government stands to gain $ 3.3 billion in terms of additional royalty and profit petroleum if the gas from Reliance Industries controlled KG Basin is sold at $ 4.20/mbtu rather than $ 2.34/mbtu, said Mr Harish Salve, Counsel for Reliance Industries Ltd.

He was arguing before the division bench of the Bombay High Court on Thursday in the RIL vs RNRL case.

NTPC has an unfinished contract with RIL for KG gas at $ 2.34/mbtu. An agreement with similar terms as NTPC, also exists between RIL and the Anil Ambani group of companies for supply of gas at $ 2.34/mbtu. This agreement is currently being contested in court. On the other hand, the Empowered Group of Ministers has decided that gas from KG basin should only be sold at $ 4.20/mbtu.

Mr Salve said NTPC will have to shell out an additional $ 2.9 billion, if gas is sold to the company at $ 4.2/mbtu rather than $ 2.34. However, at $ 4.2 price, the Government stands to gain $ 2.7 billion in terms of higher royalty and profit petroleum. Royalty and profit petroleum could further increase by $ 3.5 billion, if Reliance Energy Ltd gets 28 mmscmd of gas at $ 4.2/mbtu. Therefore, in total, the government stands to gain $ 3.3 billion, he said.

He said that for NTPC increased gas price can be passed on to the consumer as higher per unit cost.

Mr Harish Salve said RNRL has admitted that money was brought from overseas lenders under external commercial borrowing from foreign sources for its Dadri plant but later invested in mutual funds. “It is a doing a flip-flop on the ECB for Dadri plant,” he said.

The counsel for RNRL, Mr Mukul Rohatgi, refuted the claim and said that Rs 2,000 crore was raised under ECB for a wide number of businesses of the group. Money was invested in debt funds.

“However, the money was later sent back. We made profit on this transaction but RBI has levied a fine (on us) of Rs 125 crore, which we will not pay” he said.

“Since ADAG group has confidential arrangements with foreign lenders it cannot share the details of the transactions in court,” Mr Rohatgi said.

Mr Salve said that RNRL can share the ECB details with the judges: “Produce the document and put in a sealed cover, only for the judges’ perusal. Given the confidentiality, counsel from both sides can meet in the judges’ chamber and they can take a view on the issue,” he said.

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