SC verdict on RIL-RNRL gas dispute tomorrow
The Supreme Court will pronounce tomorrow its verdict on the nation's most talked corporate battle over gas supply, outcome of which will shape the future of flagship energy firms run by brothers Mukesh and Anil Ambani.delhi Updated: May 06, 2010 20:32 IST
The Supreme Court will pronounce tomorrow its verdict on the nation's most talked corporate battle over gas supply, outcome of which will shape the future of flagship energy firms run by brothers Mukesh and Anil Ambani.
A three-judge bench headed by Chief Justice KG Balakrishnan, who demits office on Tuesday, will give its judgement on the high voltage gas pricing and supply dispute between Reliance Industries and Reliance Natural Resources.
Before the Supreme Court started hearing the case, the two sides engaged in a bitter public battle with the two estranged brothers charging each other with reneging on commitments.
The dispute had also reverberated in Parliament and spilled on to the front pages of newspapers by way of an unprecedented media campaign against the government.
At stake is Reliance Industries' leap to become India's Exxon - an energy super major, and the Anil Ambani Group firm's dream of building the largest single-location power plant to become the biggest private electricity generator.
The apex court will decide if RNRL is entitled to get 28 million cubic meters a day from RIL's eastern offshore KG-D6 fields, at $ 2.34 per mmBtu, a price 44 per cent lower than government approved rates.
A day before the judgement, investors appeared to be keeping their fingers crossed, with the shares ending lower. RIL shares were down about one per cent to close at Rs 1,010.90, while RNRL was down 0.22 per cent at Rs 68.35. Shares of both the companies had taken a beating in the run up to the judgement.
RNRL claims at least one-third of peak output from KG-D6 flows citing a 2005 family agreement that divided Dhirubhai Ambani empire between the two brothers, with Mukesh getting the energy and petrochemical business while the younger one inheriting power, telecom and financial services business.
RIL already is India's largest firm by market cap and is on the verge of becoming the nation's biggest firm by profit this year, but for a judgement where it would have to sell gas at lower rate while paying royalty and taxes at $ 4.2 per mmBtu.
On the other hand, Anil, who led a front page attack on Oil Ministry through newspaper advertisements accusing it of siding with his elder brother, may have to rework plans for the ambitious 7,800 MW planned power project at Dadri in Uttar Pradesh if the apex court refuses to give it preferential treatment in supplies and price.
Chief Justice KG Balakrishnan, who had after 26 days of hearing reserved a judgement on lawsuits fought by high profile lawyers Harish Salve (for RIL) and Ram Jethmalani (for RNRL) on December 18, is due to demit office on May 11.
First Published: May 06, 2010 20:17 IST