RNRL renews attack

Anil Ambani-controlled RNRL told the Supreme Court today that Mukesh Ambani’s RIL had put it in a disadvantageous position in terms of price, quantity and tenure in their Gas Supply Master Agreement (GSMA).

Resuming arguments on the Krishna-Godavari basin gas supply dispute, RNRL counsel Mukul Rohtagi contrasted the terms of the memorandum of understanding (MoU) in the Ambani family and the GSMA, which was “thrust” upon RNRL without any discussion or approval. On all counts, RIL had given a bad deal to RNRL, he said.

While the MoU provided that terms of the gas supply agreement would be the same as the contract with NTPC, the GSMA offered a complex formula where the terms of supply varied from one to four years. This made the contract totally unbankable and unsuitable. RNRL demanded that the term should be clearly defined and the minimum should be 17 years, in line with the NTPC contract.

Rohtagi also noted the difference in the MoU and the GSMA regarding the annual contract quantity and pleaded that GSMA should clearly provide for a firm and uniform quantity, in line with the NTPC contract. It should get 28 units (million cubic metres daily), it contended.

Originally, there was no cap on the seller’s liability (RIL is the seller of the KG basin gas) in the event of shortfall in supply. In the GSMA, there is an absolute limit and the limit of damages varies between 10 days and six months. This is extremely unfair and this clause should be deleted altogether, counsel stressed.

According to the MoU and the scheme, RIL should supply gas directly to RNRL, which will in turn supply gas to power plants of the Anil Ambani group of companies for producing power. However, GSMA makes the supply directly to the affiliate companies, bypassing the holding company. This was unfair because RNRL may not have more than 51 per cent share in an affiliate, but still can control the latter. This term did not benefit RIL, but is put there only to harass RNRL, Rohtagi argued.

His arguments will conclude on Wednesday, when RIL counsel Harish Salve will begin his reply. The court has broken the normal schedule to accommodate the five Reliance appeals, in view of the vacation which starts on Friday. The arguments are expected to conclude on Friday. Further submissions will be given to the judges in writing.