Reliance Industries says it's ready to renegotiate price

Reliance Industries says it's ready to renegotiate price

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Reliance Industries says it's ready to renegotiate price

ADAG Chairman Anil Ambani with his lawyer at Supreme Court before hearing the verdict on RIL-RNRL gas dispute case in New Delhi on Friday. PTI RNRL Chief Anil Ambani has put up a brave front stating “by a majority judgement, the Supreme Court has upheld RNRL’s case (implying that it is maintainable) …… and has upheld the powers of the Court to modify the scheme to make it workable.”  

“SC also directed that suitable arrangements for gas supply should not only be suitable to RIL but also shareholders of RNRL whose interests have to be fully protected,” he said.  Further, Anil Ambani, in a statement made it clear that RNRL currently has no plans to file a review petition.

Meanwhile, RIL also said the tenure of gas supply will have to be drastically cut from 17 years as being sought by RNRL.  Anil said: “RNRL looks forward to an expeditious and successful renegotiation with RIL within stipulated period of six weeks to secure gas supply for the group’s power plants in line with the SC order.”

Utilisation policy

RIL Executive Director P M S Prasad said the terms of supply would have to be guided by government’s pricing and utilisation policy. “The price will be what government has fixed... supplies will be subject to government allocating the fuel (to RNRL or its affiliate company) and the tenure of supply will have to be in line with development plan approved for the KG-D6 fields,” he said.

 In the 2005 family MoU and January 2006 Gas Supply Master Agreement (GSMA), RIL was to supply 28 million standard cubic meters per day of gas to RNRL for 17 years at US$2.34 per million British thermal unit.  The gas was sought by RNRL to fire its proposed 7,800 MW power plant in Dadri, Uttar Pradesh.  However, the government, in September 2007, approved a price of US$4.20 per mmBtu and prioritised existing fertilizer and power plants, according to which future plants like proposed Dadri power plant of ADAG near Delhi was to be considered for allocation when the plant comes up.

 While Prasad maintains that RIL would renegotiate GSMA in line with the government policy saying “the price will have to be US$4.20 per mmBtu and the tenure shorter.” He also pointed out that the Supreme Court has upheld RIL’s position that government has a right to approve the price of gas and fix its customers.