RIL had opposed govt role in gas sale: Counsel to SC
Reliance Industries today told the Supreme Court it had vehemently protested against the government taking away its freedom to market gas, whereas Anil Ambani group had sought regulation of fuel sale through a gas utilisation policy in 2007.business Updated: Oct 22, 2009 16:39 IST
Reliance Industries on Thursday told the Supreme Court it had vehemently protested against the government taking away its freedom to market gas, whereas Anil Ambani group had sought regulation of fuel sale through a gas utilisation policy in 2007.
Resuming arguments over its dispute with Anil Ambani Group firm Reliance Natural Resources Ltd, senior counsel Harish Salve said it was RNRL which had in 2007 argued that marketing freedom cannot be allowed to the Mukesh Ambani-run firm and asked the government to frame Gas Utilisation Policy.
When the three-judge bench headed by Chief Justice K G Balakrishnan asked if the Gas Utilisation Policy was notified like the Industrial Policy, Salve said it was not and customers/sector identified in the same were passed on to RIL in form of instructions.
The Gas Utilisation Policy was formulated by an Empowered Group of Ministers (a sub-committee of the Cabinet) and the policy was part of the minutes (now part of court records).
On the third day of hearing, Salve told the apex court that RIL will take longer to recover investments it has made in the gas field if it is forced to sell fuel at lower rates.
RIL will take 5-5.5 years to recover the USD 5.8 billion investment made in the KG-D6 gas field if it sells the fuel at government-approved price of USD 4.205 per mmBtu, Salve said.
However, if it is forced to sell gas at lower rate of USD 2.34 per mmBtu, which RNRL contends that RIL had committed in the 2005 Ambani family agreement, the cost recovery would be over seven years.
Salve said Anil Ambani Group firm's Samalkot power plant in Andhra Pradesh was buying gas from KG-D6 at government- approved rates of USD 4.2 per mmBtu but was making hue and cry for other plants.
RIL, he said, was being forced to buy liquefied natural gas (LNG) from spot market at price of over USD 9 per mmBtu as the government has not yet allocated any gas from KG-D6 for its own captive use.
NTPC, which has not yet begin drawing gas from KG-D6 despite being allocated 2.67 million standard cubic meters per day, is buying imported fuel at USD 9-14 per mmBtu.
Salve said it was not possible for RIL to supply 28 mmscmd gas to RNRL for 17 years as the peak output from the field will not last for more than seven years.
He said the company cannot accelerate or decelerate the rate of production as such practices damage the reservoir and the ultimate recovery.
"If we pump out too slow or too fast there is a problem," he said.
When the bench asked if there was a regulatory body for the upstream oil and gas exploration and production, Salve said the Directorate General of Hydrocarbons (DGH) was only a nodal agency without any regulatory powers.
All operators like RIL are bound by the Production Sharing Contracts (PSC) they have signed with the government.