Reliance Industries (RIL) today said it has issued notice to suspend gas supply to Reliance Infrastructure (R-Infra) for "default" payment, within days of Anil Dhirubhai Ambani Group (ADAG) entity saying it would not pay "illegal" marketing margins to Mukesh-led firm.
"The notice has been issued due to default committed by R-Infra in payment of the amounts due to RIL under the invoice for gas supply during the first fortnight of September 2009," an RIL spokesperson said today.
R-Infra has been getting the gas from RIL for its power plant in Andhra Pradesh for last five months at a price of $4.2 per mmBtu and marketing margin of 0.13 per mmBtu.
The Anil Ambani group, fighting a legal battle for securing 28 mmscmd gas for Reliance Natural Resources (RNRL) from RIL at a price of $2.34 per mmBtu under a family settlement, had last week questioned the marketing margin and had informed RIL that it would not pay the same.
"On September 22, 2009, RIL has issued a notice to R-Infra for suspension of supply of gas to its power plant in East Godavari, Andhra Pradesh...The notice has been issued in accordance with the terms of Gas Sale and Purchase Agreement (GSPA)," the RIL spokesperson added.
Earlier in its letter, R-Infra had told RIL that their gas supply agreement was not a result of any marketing undertaken by RIL or any agency and "since there has been a complete absence of any marketing, the charge in respect of marketing margin is clearly unwarranted."
R-Infra had signed the GSPA in accordance with the gas allocation made to it by the government, along with over 40 other customers for supply of gas from RIL's Krishna Godavari fields.
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The issue of marketing margin, which according to sources all the customers were paying, was raised by Anil Ambani group firm within days of filing reply to RIL's plea before the Supreme Court wherein the Mukesh Ambani group firms stated that it was not in a position to supply gas at $2.34 per mmBtu due to the government policies.
The government also filed a special leave petition on this issue asserting its right on distribution and pricing of the fuel and the Supreme Court will commence hearing on October 20 on all these issues.
R-Infra had last week told RIL that the sale consideration charged by it in the name of marketing margin was not even shared with the government.
"You are therefore requested to withdraw the charge towards marketing margin with immediate effect. We request you to refund with interest the marketing margin that has been collected by you without any authorisation," R-Infra had said, adding that it would not make any such payments henceforth.
Terming these margins as "illegal", R-Infra has asked the Mukesh Ambani-led company to withdraw these charges and refund the payments it had made till now.