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Updated: February 17, 2012 20:00 IST

Gas pricing: Govt. nips RIL bid for legal option

Sujay Mehdudia
Comment (3)   ·   print   ·   T  T  
A view of Reliance KG-D6 field. Photo: Special Arrangement
A view of Reliance KG-D6 field. Photo: Special Arrangement

Seeking to nip in the bud the possible attempt by Reliance Industries Limited (RIL)) to take the legal route on its demand seeking the revision of gas price, the Petroleum and Natural Gas Ministry has cited a judgement by a Bench headed by former Chief Justice and another opinion by a former Supreme Court judge strongly backed the decision of the Petroleum Ministry to reject RILs demand for revision of gas price for the KG-DWN-98/3 block on the East coast of Andhra Pradesh.

A recent internal note circulated by the Petroleum Ministry, in reply to the demand by RIL for gas price revision, has cited the judgement delivered by the Supreme Court Bench comprising of former Chief Justice of India, K.G. Balakrishnan and sitting Supreme Court judge, Justice P. Sathasivam on May 7, 2010, in special leave petitions (SLP) filed by Union Government, RIL and RNRL. The judgement said, “Though the contractor (RIL) has the marketing freedom to sell the product from the contract areas to other consumers, this freedom is not absolute. The price at which the produce will be sold to consumers would be subject to the Government’s approval. The EGoM has already set the price of gas for the purpose of PSC. The parties must abide by this and other conditions placed by the Government policy.”

Justice (Retd.) B. Sudhershan Reddy had said, “The EGoM decisions regarding the utilisation of the natural gas and the price formula/basis etc do not suffer from any legal or constitutional infirmities. They shall apply to all supplies of natural gas under the PSC. The parties are bound by the governmental policy and approvals regarding price, quantity and tenure for supply of gas. Thus, it emerges that RIL is bound by the decisions of the EGOM on price, quantity and tenure of supply of natural gas and supplies of natural gas can only be made in accordance with the policies of the Government. In view of above, any revised price proposal will be examined by the Government after expiry of 5 years from commencement of supply and the contractor is directed to comply with the government decisions.’’

The Petroleum Ministry has already rejected the demand by RIL for gas price revision for the KG-DWN-98/3 block on the East coast of Andhra Pradesh on the grounds that it (RIL) had agreed for revision of price after five years. However, RIL has been insisting through its various communications, citing PSC provisions, that it had the right to demand revision of gas price and has been writing time and again to the Petroleum Ministry.

"We have sent a reply to RIL citing the judgment of the Supreme Court and that puts a cap on any attempts to explore the legal option. From our side, we have settled the issue now and revision of gas price will happen only after expiring of five year period," a senior Petroleum Ministry official said.

Responding to the issue of RIL observation regarding selling gas at higher prices, the letter states that the EGoM while approving the price formula/basis, had decided that the supply to all consumers would be made at the approved price and further that in the case of RIL vs. RNRL, the courts – Bombay High Court and Supreme Court acknowledged the position of the government that contractor is required to sell the gas to all its customers at a price/formula approved by the government and that he can neither sell at a lower price or at a higher price.

Yes , the government has right to fix the price of any comodity falls in public domain.


from:  Raman
Posted on: Feb 19, 2012 at 18:01 IST

RIL's expenditure to pullout gas is less than 2 dollar per unit. They are paying for 4.2 dollar which is more than 100% profit. Govt' of India is the owner of the natural resource. RIL is only the service provider. They can't expect more than that. Buying of Natural Resource from other country is costlier always. But that does not mean to pay the money to RIL. India should provide license to other service providers to pull out Gas.

from:  Sanjoy Ghosh
Posted on: Feb 19, 2012 at 07:30 IST

India has no knowledge of deep sea exploration of oil and gas. Mukesh
Ambani ventured into the business with all risk had he not found
anything loss would have been his and Govt of India has nothing to
loose. But as of late RIL unable to tap gas due to under water complicity
but at the same time Govt of India is buying the same gas from other
country @16 dollar where as paying RIL only 4.2 dollar for which RIL
is asking for 8 dollar.Govt of India can very well cross check with
other countries engaged in such business and make out if RIL demand is
justified or not without simply nodding its head and bluntly saying NO
to RIL. Opposition parties should intervene and cross check if the
present govt is hunting for some fodder money and finally saying yes
to RIL,but country needs gas and oil and no mischief should be
tolerated in RIL's gas production with reasonable payment.

from:  Subash Das
Posted on: Feb 18, 2012 at 19:55 IST
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