The oil ministry on Wednesday asserted before the Supreme Court that the government's production-sharing contract with the Mukesh Ambani-led Reliance Industries Ltd (RIL) bars the company from private arrangements to supply gas.
"The government has exclusive rights over all minerals underlying the ocean and in the country's territorial waters," Additional Solicitor General Mohan Parasaran, appearing for the oil ministry, told the three-member bench of the apex court.
"As per the production-sharing contract, the ownership of the gas cannot be passed on to RIL," Parasaran told the bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam.
"RIL cannot sell gas as it pleases," he said, while submitting his argument on behalf of the ministry of petroleum and natural gas, adding that the gas also cannot be reserved for any particular party in fixed quantities and tenure.
The court is hearing the dispute over the supply of 28 million units of gas for 17 years at $2.34 per unit to Anil Ambani-led Reliance Natural Resources Ltd (RNRL) from the gas fields off the Andhra Pradesh coast, awarded to RIL.
The price, tenure and quantity were based on a family re-organisation pact of 2005, but RIL subsequently said it could only sell the gas for $4.20 per unit, as this was the price, the company claimed, fixed by the government.
RNRL counsel Ram Jethmalani has already opposed the oil ministry's plea to join the gas dispute as a party. He has also said if the oil ministry is granted its request, cross-examination of its officials must also be allowed.
Elaborating on the policy for gas, Parasaran said the RIL is supposed to supply gas to customers at a uniform arm's length price, fixed on the basis of the formula evolved by the government that takes global prices into account.
The counsel said that in July 2006, the oil ministry had rejected RIL's pact with RNRL for the supply of gas at $2.34 per unit. He also said the Bombay High Court's ruling in favour of RNRL overrides the government's executive authority.