Govt to lose hefty revenues if RNRL demands are met: RIL tells SC
Mukesh Ambani group firm RIL told the apex court that the government will lose Rs 22,600 crore in revenues if RNRL was supplied gas at a price of $2.34 per mmBtu. The Anil Ambani group firm, on the other hand, will make a windfall profit of Rs 23,800 crore.business Updated: Oct 11, 2009 12:09 IST
Mukesh Ambani group firm RIL told the Supreme Court that the government will lose Rs 22,600 crore in revenues if RNRL was supplied gas at a price of $2.34 per mmBtu, while the Anil Ambani group firm will make a windfall profit of Rs 23,800 crore.
In its reply to the RNRL's SLP, RIL said that RNRL was "misleading" the court by alleging that it will gain Rs 50,000 crore as the difference in revenue between the governmnet approved price of $4.2 and $2.34 for 28 MMSCMD of gas over 17 years.
In the affidavit, RIL said that the life of gas field was 12 years and Anil Ambani group can receive gas for maximum of eight years as it would take a minimum of three years to set up the power plant at Dadri in Uttar Pradesh.
"The dfference in net revenue (net of capex and opex) adjusted for eight years (even on the erroneous basis of RNRL) works out to be approximateley Rs 23,800 crore," it stated.
Out of this Rs 23,800 crore, approximately 95 per cent (Rs 22,000 crore), which included royalty, taxes and profit share, would be lost by the government and around 5 percent i.e, Rs 1,200 crore would be lost by contractors (RIL and NIKO).
"If RIL were to sell 28MMSCMD of gas to RNRL at $2,34 mmBtu for 17 years while the government adopted $4.2 for purpose of valuation (for tax and other levies), RIL would incur a cash loss of Rs 50,000 crore. This would result in RIL's not even recovering its investments," it further added.
"... all the actions of RNRL are clearly motivated by commercial greed, with the goal of pocketing trading profits (by selling gas to the power plants of Releiance Energy Ltd and RPPL) far in excess of the alleged Rs 50,000 crore without making any effort or investment, all to the detriment of the government and the common man," RIL said in its reply.