Will RIL-RNRL be out of eGoM pricing ambit?

“The Minister for Law clarified that the two cases between RIL versus National Thermal Power Corporation (NTPC) and Reliance Industries Limited (RIL) versus Reliance Natural Resources Limited (RNRL) were separate contracts between the supplier and different companies.

“We have to keep these cases beyond the scope of our deliberations and take a decision in general on NELP pricing issue,” the government said in its interlocutory application quoting the minutes of the eGoM held on August 28, 2007.

The empowered group of ministers (eGOM) had approved US$4.2 per mmBtu as price for natural gas from RIL’s KG-D6 fields, whereas both NTPC and Anil Ambani group firm RNRL are fighting legal battles to source gas from Mukesh Ambani-led RIL at USD 2.34 per mmBtu. On the rationality of eGoM approving a higher price than what was bid by RIL in the 2004 NTPC tender, the Law Minister at that time had clarified that “High Court has held that government can go ahead with price determination. As it is, the government has the sovereign right under the Production Sharing Contract to fix the price.”

The application, however, said that RIL-NTPC case could not be regarded the same as RIL and RNRL because of NTPC’s status as a public utility and the process of international competitive bidding.

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