In what could seal the fortunes of the gas and power businesses of the two Ambani brothers, the Supreme Court is to deliver a judgment tomorrow on the bitterly fought dispute over gas from the Krishna-Godavari basin’s D6 block (KG-D6).
The judgment would also set a course for the gas market, impacting government revenue and the power and fertiliser companies consuming the gas.
The fight is between Mukesh Ambani’s Reliance Industries Ltd (RIL) and Anil Ambani’s Reliance Natural Resources Ltd (RNRL) over the sale of natural gas being produced by RIL from its prolific D6 block.
A three-judge bench headed by Chief Justice K G Balakrishnan, whose tenure ends on May 11, had reserved its judgement in the lawsuit after arguments concluded on December 18. The apex court heard the case for 26 days spread over nine weeks, beginning October 20 last year.
RNRL is seeking, under an earlier family arrangement, 28 million standard cubic metres per day of gas (or more than a third of the peak output, estimated at 80 million standard cubic metres) from KG-D6, at $2.34 per million British thermal unit (mBtu) for 17 years. RNRL was to set up an 8,000-Mw power unit at Dadri in UP with this gas.
The price impacts the government’s share of revenues and the Union petroleum ministry disapproved the $2.34 one. The ministry also said the government is the owner of the gas and RIL just a contractor. Hence, it would decide both, price and customer. In October 2007, the government fixed the price at $4.20 per mBtu. The government also brought in a utilisation policy to sell the entire D6 gas to priority sectors like fertiliser, power, city gas, etc.
RNRL’s claim was, however, upheld by the Bombay high court in a judgement in June 2009. This judgement was challenged by RIL at the Supreme Court, citing the 2006 government decision to reject the price. The government was also made a party in the case. Top lawyers fought this case for the two brothers. While RNRL was represented, among others, by Ram Jethmalani, Harish Salve appeared for RIL.
