Govt gave freedom to RIL in fixing gas prices: RNRL

Anil Ambani led RNRL on Tuesday submitted “crucial” documents in support of its contention that the government had no role in fixing the gas price.

Anil Ambani led RNRL on Tuesday submitted “crucial” documents in support of its contention that the government had no role in fixing the gas price. The documents were oil ministry’s answers in Parliament in which it gave “unqualified reply that the contractor, Mukesh Ambani led Reliance Industries Limited (RIL) had complete freedom to market the natural resource.”

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RNRL’s senior counsel Ram Jethmalani told Supreme Court that the oil ministry later sought to convey an impression that pricing of natural gas by RIL was subject to the government control. Quoting the production-sharing contract (PSC), he added the government’s new exploration licensing policy regime gave freedom to operators to market gas within India, including Uttar Pradesh.

Jethmalani backed his arguments with the answer of former minister of state of petroleum, Dinsha Patel, who in August 2007 replied to a question on “gas source for Dadri power plant” in Rajya Sabha. He also placed petroleum minister Murli Deora’s reply in Rajya Sabha before the court and stated that the PSC provided for pricing of gas on the basis of sales on arms length principles.

Jethmalani said the government had no power to fix the sale price but approve formula basis for valuation purpose.

“RIL conducted a bogus bidding process by inviting select companies. The formula was concocted to assure a minimum gas price to RIL of $4.2/mmbtu, (Rs 194.33)” he claimed before the court.

The RNRL counsel also argued that the date on which the contract was signed between the government and RIL, there was no gas pricing policy.