Throw out RNRL and take over gas, RIL tells Centre

RIL advocate Harish Salve appearing before a three-Judge bench headed by Chief Justice K G Balakrishnan said “By applying Essential Service Maintenance Act (ESMA), the government can take over the gas and throw the company out, after all RIL status is that of a contractor.’’

While countering the arguments of Reliance Natural Resources Ltd, Salve said it had started an internecine legal battle on the gas supply from RIL despite knowing that the supply would be subject to government approval. The effectiveness of the scheme of arrangement would be conditions precedent, including necessary approvals from the companies involved and the relevant regulatory authorities and courts and the entering into the definite agreement, Salve said. “On a correct interpretation of the PSC, it is submitted that the price at which gas is sold is subject to government approval,’’ Salve said reading from the documents RIL submitted on Thursday. Reliance industries said the only suitable agreement for supply of gas to Dadri Power Plant is supply of gas under the GUP and at the price arrived as per the formula approved by the EGOM which is applicable for supply of all the gas produced by RIL.

It is RIL’s position that GUP compels it now to supply gas to named customers, in named quantities allocated at the price arrived at as per the formulae approved by the government and for the tenure approved by the government, he said.
“Why I have not challenged the GUP?,” said Save and added, “I know that if I push the government of India in a corner, they will force me out of the business.”
Referring to RNRL’s representations earlier to the government with a plea to regulate the gas price, Salve told the court the RNRL themselves had earlier told the government: “Do not leave us at the mercy of the government.” Government has absolute right to regulate the gas price, save also sought to refute RNRL’s concept of “suitable bankable agreement on gas supply with the RIL, which includes supply of 28 MMSCMD for 17 years at $2.345 pr unit.

Salve asserted that “the only suitable agreement for supply of gas to the REL’s Dadri Power Plant is supply of gas under the GUP and at the price arrived as per the formula approved by the EGOM which is applicable for supply of all the gas produced by RIL.”

“It is RIL’s position that GUP compels it now to supply gas to named customers, in named quantities allocated at the price arrived at as per the formulae approved by the government and for the tenure approved  by the government,” said Salve.