KGBasin

Even as India Inc and the government rejoices over the settlement between Mukesh Ambani and Anil Ambani, it seems like the drama is not over yet. NDTV has learnt that Mukesh Ambani-led Reliance Industries now wants the government to clarify its gas allocation policy before it begins talks with RNRL over gas supplies.

For this the company has already sent feelers to the empowered group of ministers (EGoM) members seeking further clarity, sources said.

Sources said RIL has informed the government that there is no room for re-negotiation as per the government’s current gas utilisation policy.

Sources close to the development also say that RIL wants the government to play a significant role in renegotiations with RNRL. When contacted, RIL declined to comment on the news.

The Supreme Court had on May 7 rejected Anil Ambani Group firm RNRL’s claim for cheap gas from RIL as had been decided in a private family agreement of 2005. The apex court had directed the two companies to rework gas supply pact keeping the government’s pricing and utilisation policy in mind.

RIL and RNRL are likely to meet formally next week for renegotiations on the family pact that provided for Anil Ambani firm getting 28 million cubic meters per day of gas for 17 years.

Source:http://news-views.in/ril-seeks-clarification-on-gas-utilisation-policy/

RIL executive director PMS Prasad, a long-serving hand since the late 1980s, has been the company’s public face all through the gas battle — whether at Court Room No 1 at the Supreme Court, or the corridors of Shastri Bhavan that houses the petroleum ministry. Prasad was present on Friday too as the drama was about to be capped in the Supreme Court. ET caught up with him immediately after the judgement

<strong>What is it that came to your mind when the judgement was announced? </strong>

Relief! That it’s all over.

<strong>Who was the first to congratulate you after the judgement? </strong>

My boss Mukesh Ambani. He said it was a good job done and we need to get back to work. I also got a call from Mrs Ambani, who said we have to move on to the next generation of value creation.

<strong>How is Monday 9 am going to be different? </strong>

It’s going to be a different day. We are relieved of the tension. We have to get down to business and begin negotiations with RNRL.
<strong>
Is this the best judgement? </strong>

Under the given circumstances, one could not hope for a better judgement.

<strong>How do you plan to go about negotiating the agreement with RNRL? </strong>

We have to negotiate a fresh gas sale and purchase agreement, which has to be bound by the broad parameters laid down by the court. Any fresh gas sales purchase agreement will have to uphold the price approved by the government, honour the utilisation policy of the government and various empowered Group of Ministers’ (eGoM) decisions with regard to utilisation.

<strong>What are the parameters that you will need to thrash out with RNRL? </strong>

The issues will include other parameters of GSPA like liability, penalty, alternative arrangements for fuel, the quantity of gas, quality of gas, etc. We have already concluded GSPA with several consumers and this GSPA will have to be similar to those.

<strong>Did the court mention the family MoU? </strong>

Yes. Although the court held the production-sharing contract was supreme, it directed RIL & RNRL to renegotiate in the context of the existing MoU; more like the MoU being a backgrounder under which we could renegotiate. But at all times, it is the supremacy of the PSC and the government decision that have to be kept in mind.

<strong>How long will you have to reach that agreement — do you have a timeframe? </strong>

We have to go back to the Mumbai HC within six weeks and then if we can mutually agree to a GSPA, it will need to be verified and approved by the government.

<strong>Are you saying RNRL & RIL can possibly be business partners where RIL is the gas seller and RNRL the buyer? </strong>

Yes! There is every possibility that we will work as partners and we will make a genuine effort to reach out and settle this GSPA in accordance with the court order and government law.

So, what is clear is that you are willing to provide gas at $4.2 mmBtu if the government approves the contract.
Yes, that is the price we will start negotiations at.

<strong>What are the key takeaways of today’s verdict? </strong>

It is clear that we have to follow all government policies and eGoM decisions and the PSC is the basis for all contracts. Secondly, the court order has also made it clear that the government has the right to determine prices and allocate the gas as per national interests. It has in a way only reaffirmed what the government has been saying. Thirdly, by directing us to renegotiate, but referring to the family MoU, the court has asked both RIL and RNRL to initiate talks and take action within six weeks.

<strong>How do you think this order will be received by investors, particularly global oil majors? </strong>

We expect the government to come out with a clear policy, which will state all that the verdict has said so that investors have complete confidence in consistency of policies. If companies like Exxon, Chevron and Shell can go to countries like Nigeria or Venezuela where there is so much political uncertainty, there is no reason why investors should not come to India.

<strong>Any regrets? </strong>

Yes. Too much time was wasted. There is not a single decision that the government has taken in the last seven months. And institutions like the Director General of Hydrocarbons, the petroleum ministry and even the CAG have suffered a huge reputation damage. And as for the advertisements in the newspapers where it was said that the petroleum minister was in RIL pockets.(laughs) I constantly looked for him but didn’t find him. We need to get back to business, value creation and positive thinking.

Source: http://news-views.in/pms-prasad-well-make-an-effort-to-reach-out-to-rnrl/

India’s top court has given a unanimous verdict today on the Ambani gas row upholding the government’s right to determine gas-pricing. The Supreme Court had finally given a judgment on the gas-pricing dispute between the Ambani brothers that has raised concerns over the government policy on gas pricing for India’s upcoming energy based economy and rattled investors.

The verdict delivered by Judge Sathasivan and supported by all others with Reddy disagreeing only on one minor point. The case in the Supreme Court was heard by a three-judge bench. Two of the judges have delivered separate verdicts and majority opinion prevailed. This judgment is based on the basic fact the gas is a public good and belongs to the government and its people.

Mukesh Amabani’s point that he could not go against the government’s Production Sharing Contract has been re-iterated by the government. As an extension of the judgment Anil and Mukesh Ambani have been given six weeks to renegotiate the contract that forces RIL to sell gas to RNRL. The judge said that a government contract over-rides all private agreements and the memorandum of understanding between the two brohers signed in 2005 does not stand.

The Chief Justice has signed the verdict on the RIL RNRL gas row delivered by Justice Sathasivan. The verdict says that both brothers must sit down and re-negotiate the gas supply master agreement (GSMA) and then come back to the Court in 6 weeks. The verdict further said that gas is a national asset and belongs to the government till delivered to the consumer. The court said it will give its direction in 8 weeks.

The previous MoU has stood to be in contradiction with the government policy as well as the Production Sharing Contract. The re-negotiated agreement between RIL and RNRL will have to be reworked within the ambit of the government’s gad pricing policy. Further the judgment adds that the government regulation must dictate the renegotiation plan and RIL and RNRL should renegotiate under government rules.

Source:http://www.reliance-news.com/mukesh-ambani/mukesh-ambani%E2%80%99s-points-were-in-line-with-supreme-court-verdict/

The Supreme Court reserved its judgement in the Ambani Gas Row on gas supply and pricing between the Ambani brothers with Government asserting that the title to the natural gas vests with it.

“Title to the natural gas under the production sharing contract (PSC) vests with government and does not automatically pass to the contractor,” Solicitor General Gopal Subramanium submitted before a Bench headed by Chief Justice K G Balakrishnan.

Hearing in the case was spread 26 days since it commenced on October 20. It also witnessed the recusal of Justice R V Raveendran from the Bench after hearing the matter for six days on the ground that he held shares of both RIL and RNRL.

Responding to the contention of Anil Ambani-led RNRL that the title of the gas inevitably passes to the contractor, which is Mukesh Ambani Group RIL, upon reaching the delivery point, Subramanium said the PSC specifically provides for and recognizes the fact that “Government is the sole owner of the gas” and the title passes to the contractor only at the delivery point when it sells the gas to the buyer”.

“Government has its PSC. Please do preserve it and don’t allow any interpretation otherwise it would lead to trouble in future,” he submitted before the Bench also comprising Justices B Sudershan Reddy and P Sathasivam.

“PSC is really one of the nobel instrument by which government control over the gas reservoir. Our PSC is being subjected to lateral attack, interpretation and assault,” Subramanium said.

He denied the allegation of RNRL that Government was acting in mala fide manner and siding with RIL. “I deny all allegations of mala fide. Our problem is independent of the parties in dispute,” he said adding that “we (government) are compelled to be present in this dispute as we want to preserve the contract”.

He said though RIL and RNRL are fighting over the gas supply and its price, it is the government which has lot of worry as it has to determine the price and come out with means on how the cost of production has to be recovered.

The Solicitor General said the price of gas was brought down from USD 4.33 to 4.20 per unit on the basis of the formula approved by former RBI Governor C Rangarajan.

He said RNRL has been demanding that the gas at the norms of NTPC but allocation of gas has not been made to the PSU.

Earlier, RIL counsel Harish Salve concluded the counter-argument to the submission of RNRL by contending that family MoU of 2005 was not binding for supply and pricing of gas from the KG Basin.

RNRL counsel Mukul Rohatgi said “our only concern is we should get the gas on NTPC terms. I am riding on NTPC agreement”.

Salve, while making the submission, said the NTPC contract was perhaps not appropriate. “Why I should repeat the same mistake which I have done with NTPC?” he said.
RIL has entered into agreement with the NTPC to supply the gas from KG Basin at USD 2.34 per unit.

RIL and RNRL are pitched in a high-voltage legal battle for the supply of gas from the KG Basin.

While RNRL is seeking gas at a committed price of USD 2.34 per unit, Mukesh Ambani’s Reliance says it cannot honour the commitment made in the family agreement reached four years back due to government’s pricing and gas policy.