The Mukesh Ambani-led Reliance Industries Ltd (RIL) and his younger brother Anil Ambani-led Reliance Natural Resources Ltd (RNRL) signed a revised gas supply agreement on Friday as per the directions of the Supreme Court.
Although neither side gave details of the revised gas supply agreement, sources in Reliance Natural Resources said that it was for 17 years for projects totalling 8,400 MW at a government determined price of $4.2 per mBtu (million British thermal unit).
When contacted, RIL spokesperson declined to give details saying that the contract was as per the direction of the Supreme Court and in accordance with government's policies.
The government has fixed a price of $4.2 per mBtu for five years for gas from RIL's KG D-6 fields. The announcement of the deal comes within weeks of the warring brothers signing a truce agreement for creating a “harmonious environment of cooperation and collaboration” between their respective groups.
Shortly after the deal was signed on Friday between Mukesh-led RIL and Anil group firm RNRL, the agreement was submitted to the government for necessary action, Oil Ministry sources said but clarified that neither any quantity, duration of gas supply, specific project nor price was mentioned.
Rejecting a family agreement between the two brothers, the Supreme Court in its order on May 7 asked the two companies to renegotiate the agreement and base it on the fact that the government was the owner of natural resources (gas) and pricing and utilisation of gas would be decided by the Government.
“Pursuant to and in compliance with the directions and orders contained in the judgment of the Supreme Court delivered on May 7, RIL and RNRL have today [Friday] signed a Gas Supply Master Agreement (GSMA). The said GSMA is compliant with the Gas Utilisation Policy and EGoM decisions,” RIL said in a statement here.
In another statement filed with the stock exchanges, RNRL said that “pursuant to the judgment of the Supreme Court dated May 7, RIL and RNRL have on June 25 signed a revised GSMA.”
“RNRL will now take appropriate steps requesting the Government for expeditious allocation of natural gas to facilitate implementation of the same,” RNRL said. However, both RIL and RNRL refused to divulge the details of the revised gas supply agreement. In the last annual general meeting on June 18 here, Mukesh Ambani, Chairman of RIL, had said that “As and when the power plants of ADAG are ready to receive gas, we would commence supplies to them, subject to government granting allocations to these plants in the same manner as we do to all other plants to whom the government has allocated gas from the KG-D6 gas field. With this legal dispute behind us, we look forward to a harmonious and constructive relationship with ADAG.”
“It has always been our position that we are, and continue to be, governed by the provisions of the production sharing contract in all respects of the petroleum operations carried out by us. We have also been fully conscious that the Government of India has more than a significant say in these operations,” said Mr. Mukesh Ambani.
