Mukesh Ambani-promoted Reliance Industries (RIL) will not scale down production from the Krishna Godavari (KG) basin to accommodate Anil Ambani-promoted Reliance Natural Resources' (RNRL) future gas needs, said Harish Salve, senior counsel for RIL, in his concluding argument at the Bombay High Court today.
Salve said that once RIL begins production from KG basin, it cannot adjust the same according to the needs of RNRL. "RNRL has nothing in place. They don't a have single power purchase agreement signed. They have not signed any engineering procurement contracts either. And press statements suggest it would take another two years to do so,” said Salve.
Besides, they would be building the power plant in a staggered manner," said Salve. "The entire story of RIL delaying the Dadri power project is a complete lie," he added.
Salve added that RIL would also not renegotiate the government-approved price of the gas — $4.2 per million British thermal unit (mBtu), which has been arrived at through an arm's length formula — for sale to RNRL.
Salve said RIL could lose around $1 billion if it was asked to sell 28 million cubic metres of gas per day from KG basin at a price of $2.34 per mBtu to RNRL.
The senior counsel for RIL was arguing on the disputed gas sale master agreement (GSMA) according to which RIL is supposed to supply gas to RNRL for its power-generation project at Dadri, Uttar Pradesh.
Salve emphasized that RIL does not agree to supply gas to RNRL for a period of 17 years unconditionally. "We have to have a formula by which we can synchronize RIL's need for production and RNRL's needs for gas," added Salve.
During the earlier court hearings, Salve had expressed that RIL fears RNRL would trade the gas-- that it gets from RIL at cheap price-- to a third party since it does not have its power plant in place.
"RIL needs government's prior approval regarding whom to sell the gas to," Salve contended. The lease given to RIL is for 25 years and ends in 2025. The gas reserve will run out within this time period. RIL is likely to recover its cost towards the project within the next three to four years, Salve added.
A division bench comprising Justice J N Patel and K K Tated is hearing the gas dispute case between billionaire brothers. The case will come up for further hearing on August 12, when the government counsel, will argue.
The government in April had filed an application in the court saying it should be made a party to the case as it part-owned the gas that RIL was planning to produce from its D6 block in the Krishna-Godavari basin this year. RNRL counsel, Ram Jethmalani will argue on August 21.
