Following the Mumbai High Court’s judgement on the Reliance Industries Ltd (RIL)-Reliance Natural Resources Ltd (RNRL) case, Union fertiliser secretary Atul Chaturvedi — in a letter to petroleum secretary R S Pandey — has said any family settlement should not override the government’s sovereign right to formulate policies that are in the larger public interest.
The fertiliser secretary has also warned against fertiliser companies going to court in case there is a supply re-distribution.
The fertiliser ministry’s concern follows the court’s June 15 verdict ordering Mukesh Ambani-controlled RIL to supply 28 million metric standard cubic metres per day (mmscmd) of gas to Anil Ambani-owned RNRL from its Krishna-Godvari (K-G) basin reserves at $2.34 per mBtu. The judgement will jeopardise the empowered group of minister’s decisions on gas price and utilisation under which the fertiliser sector gets priority over other consumers for gas supply. The EGoM also fixed the gas price at $4.2 for a period of five years from the date of production.
“The gas in question has been allocated based on the government’s authority and rights under the production sharing contract aimed at regulating gas marketing. Our understanding is that any family (Ambani) settlement would not over-ride the sovereign right of government to formulate policies aimed at larger public interest,” fertiliser secretary Chaturvedi said in the letter. When asked, petroleum secretary Pandey confirmed receiving the letter and said it is being examined.
Chaturvedi also asked the petroleum ministry to re-affirm the continuity of the K-G Basin gas allocation at the existing price of $4.2 million metric British thermal units (mmBtu) to the fertiliser industry. According to the government’s gas utilisation policy, 15 mmscmd is being supplied by RIL from its K-G Basin reserves to the fertiliser sector since April.
The clarification/re-confirmation in this regard will remove the uncertainty in supply of feedstock to the fertiliser industry. This would also have implications on the fuel oil and naptha-based urea units, which are making investments to switch feedstock to natural gas as per the government policy, Chaturvedi said.
Last week, the Fertiliser Association of India had written to the fertiliser ministry, seeking a re-confirmation from the government that the June 15 judgement of Bombay High Court on RIL gas supply will not affect the (existing) supply of gas from KG Basin to the industry.
