Demerger led to gas dispute, Reliance tells SC

Demerger led to gas dispute, Reliance tells SC

Says it would not be possible to supply gas to RNRL for a period of 17 years

Reliance Industries advocate Harish Salve said “had there been no demerger, RIL would have used the gas of KG6 at its Dadri project at the agreed price and it would not have been termed as arms length marketing.”

On the fifth day of argument Salve told a bench of Chief Justice K G Balakrishnan, Justices R V Raveendran and P Sathasivam that same price ($2.34 per unit) would have been charged from NTPC and REL for its supply of gas. It was agreed to supply the gas at NTPC bid price to REL as it would been at a competitive position to produce power from its upcoming 7500 MW mega power project at Dadri, Salve said.
Reliance Industries said the gas in KG6 would last till 2019, and Reliance Natural Resources Limited was yet to set up the plant. It would not be possible to supply gas for 17 years to RNRL as it would take at least 3 years to set up the plant. RIL would have used the gas produced from the reservoir for production of power, he said. 

Justice Raveendran observed that selling gas at $3.24 per unit would be beneficial for the public, whereas selling gas at $4.2 would benefit RIL. But at the end of day’s arguments, he clarified that the observation was for eliciting response from the RIL counsel, but not the view of the court.

Govt to gain from royalty
However, to counter the arguments, Salve said government would be gaining Rs 54,000 crore by way of royalty and tax form KG6 if gas is sold at $4.2.
Salve said the company has spent Rs 38,000 crore on the project for exploration and development and at the government decided price, it would recover its cost with its benefits in 5 to 6 years.

Despite raising Rs 11,000 crore from the market and Rs 4,000 from foreign investors, but not even Rs 50 was invested in the Dadri project by Anil Ambani group.