RNRL says govt loss 'overstated'

Anil Ambani group company Reliance Natural Resources Ltd (RNRL) termed as "notional and grossly overstated" reports of losses the government would have incurred if it allowed the gas deal between Reliance Industries and itself.

The RNRL statement came in the wake of reports quoting government officials saying the government would have lost about $7.5 billion (Rs 34,500 crore) in revenues if it had let RIL sell gas to RNRL at a price ($2.34 dollar per mmbtu) not discovered through competitive bidding. RNRL alleged that RIL was misleading the ministry of petroleum and natural gas.

In a statement, the Anil Dhirubhai Ambani group company regretted its gas sale deal with RIL was rejected without subjecting it to the recommendations of the committee the petroleum ministry has now constituted to formulate guidelines for valuation of gas under the production sharing contract.

The Panna/Mukta-Tapti (gas fields operated by RIL) price of $4.75 per mmbbtu was not a comparable benchmark, as it was a short-term price for three years, while the RNRL deal is for a 17-year contract, the statement said.

Moreover, the terms and conditions of the two contracts are completely different.

Asserting that short-term prices, as a rule, were more volatile and higher than long-term prices, RNRL said its price and all terms and conditions were the same as that of NTPC deal (with RIL) for supply of gas.

The NTPC price was arrived after a process of open, transparent and competitive bidding process. Since both transactions were agreed on at the same time in 2004, besides being similar in all respects, the RNRL deal is also arms-length and competitive and reflected market conditions," the statement said.

It may be recalled that the petroleum ministry had last week rejected RIL's gas sales proposal to RNRL on the ground that it was not through competitive arms-length route and the agreement between the two companies was more of a result of the settlement between the Ambani brothers.