A gaseous state: Anil takes Mukesh to court in gas spat

NEW DELHI: After settling a fractious ownership dispute internally and later sparring on several occasions with one another in the public domain, the two Reliance groups’ continuous squabble in the business arena may enter a new terrain.

Mukesh and Anil Ambani may, for the first time, decide to confront each other in the court room.

On Tuesday, the Anil-controlled Reliance Natural Resources Ltd (RNRL) has approached the Bombay High Court on the issue.

While seeking implementation of the high court’s demerger order of December 2005, RNRL has, in effect, taken Mukesh Ambani-controlled Reliance Industries Ltd (RIL) to court for not selling natural gas from its Krishna Godvari basin discovery to it.

RIL is already locked in a legal tangle with government-owned NTPC Ltd on the issue of gas sales.

“RNRL has approached the court for suitable direction to RIL on the implementation of its order passed by the high court in December 2005 relating to gas supply,” an Anil Ambani group spokesperson said.

The company has appealed to the court of the company judge at the Bombay High Court.

Reliance Industries officials were still ascertaining the position and declined to comment.

The RNRL application was filed even as the group lost another legal battle in the Supreme Court on airport privatisation.

The petroleum ministry had in July stated the formula for gas sales to RNRL had not been derived on the basis of “competitive arm’s length sales” in the region for similar sales under similar conditions”.

It said the transaction between RIL and RNRL was part of their de-merger agreement and therefore does not meet the production sharing contract criteria of “arms length sales”.

RIL had sought approval of the ministry of natural gas and petroleum for sale of gas to RNRL at a delivered price of $3.18 million British thermal unit.

On being approached, RIL spokesperson refused to comment but sources in the company said the RNRL move was prompted by delays in the implementation of the Dadri power plant.

“The government, as a party to the contract (PSC signed at the time of award of contract for the KG basin), is concerned with the formula or basis on which the gas under the PSC is to be valued for the purposes of computing cost recovery linked to the valuation of cost petroleum, the profit share of the parties including the government and the royalty,” said a government statement then.

RIL had on November 1 announced its plans to double investment in the D6 block, off the coast of Kakinada in Andhra Pradesh, to $5.2 billion from about $2.6 billion projected two years back.

With higher investment and low selling price, the government’s share of profit petroleum declines.