It's a lost cause for Anil, opine analysts

It's a lost cause for Anil, opine analysts

The entire basis of his claim was the family Memorandum of Understanding (MoU) which was set aside by the Supreme Court. Nothing will happen in six weeks,” said senior partner of law firm Titus & Co, Diljeet Titus. The government has already fixed the price of gas from RIL’s KG-D6 fields at US$4.20 per mmBtu, compared to the US$2.34 per mmBtu sought by ADAG firm RNRL.

Higher prices

Deepak Mahurkar, Associate Director — Oil & Gas Practice of global consultancy firm PricewaterhouseCoopers said, “Although Supreme Court has asked for renegotiation, it appears RNRL is not likely to get any gas from the KG Basin. Firstly, the company (RNRL) may not be able to afford gas at higher prices and secondly,  government may not be left with gas to allocate.”

Besides the price, the government has fixed users for over 90 mmscmd of output from KG-D6 fields. 64 mmscmd of this is on long-term basis and the rest is temporary. Reliance Industries’ current output from the fields is about 62-63 mmscmd.

For many years to come and till the demand-supply gap is bridged, he said “the government is expected to decide the gas price. It will have a final say.”

The Supreme Court judgment, Titus said sets a wrong precedent as it would allow contracting parties to wriggle out of an agreement citing reasons of public interest or with the help of government intervention. It also sets a precedent where government is being allowed to override a private contract.

The verdict is not an investor friendly judgement, he pointed out, further adding that “as the Supreme Court ruling is binding on other courts, it will be cited by parties to come out of contract...The judgment will also have implications for similar family arrangements.”