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Home News Power Sector News Mumbai High Court allows Reliance to sell KG basin gas at $4.20

Mumbai High Court allows Reliance to sell KG basin gas at $4.20

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Mumbai High CourtThe Bombay High Court allowed the Mukesh Ambani-controlled Reliance Industries to sell natural gas from its KG basin block at the Government approved price of $ 4.20/mmbtu, till the final judgment on the on-going case is pronounced. The sale of gas by RIL was banned by the court through an interim injunction obtained by Reliance Natural Resources Ltd in 2007. RNRL’s contention was that it has the first right to the gas from the KG basin, under the Ambani family agreement. RNRL has been seeking gas from RIL on the same terms it had agreed with state-run power company NTPC Ltd — at $2.34 per mBtu.

The Division Bench headed by Mr Justice J.N.Patel and Mr Justice K.K. Tated, which has been hearing the case, on 30-01-2009 passed an interim order vacating the ban on RIL selling gas to parties other than Anil Ambani-controlled RNRL.The Division Bench also said that the interim order would operate only till the final judgment is given and it will not affect the rights of RIL and RNRL.

The Additional Solicitor General of India, Mr Mohan Parasaran, who is representing the Union Government in the case, told presspersons that this is an interim order.

The court has allowed RIL to sell gas at the rate determined by the Government. “We had requested the court to lift the injunction so that gas could be sold by the end of February at the rate of $4.20/mmbtu. The gas would be sold according to the gas utilisation policy of the Government. Priority sectors such as power and fertiliser plants will get preference.

Mr Parasaran said the lifting of the ban on sale of gas is in public interest. Final judgment in the case is expected by mid-March.

Counsel for RIL, Mr Harish Salve, while arguing the case, said that any gas supply contract which RIL will sign in the interim period will have a rider that the other party will have to abide by the final judgment given by the court.

Commenting on the order, Mukul Rohatgi, senior counsel RNRL said, "Our rights are fully protected with the orders passed today and this is not a disappointment to us. We know that the gas has to come out and be consumed."

The order will give a major fillip to power and fertiliser plants, which consume 70 per cent of the gas available in the country and are on top of the government's priority users.

The gas will bring down the cost of the power by 60 per cent. The KG basin gas is expected to cost $7 per mBtu, after adding transport and taxes.



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