Special Correspondent

Anil Ambani company questions legality of the suspension move

NEW DELHI: Mukesh Ambani owned Reliance Industries Ltd. (RIL) on Thursday issued a notice to suspend gas supply to Anil Ambani owned Reliance Infrastructure for ‘default’ in payment.

The notice comes within days of Anil Ambani company asserting that it would not pay illegal marketing margins to RIL.

“The notice has been issued due to default committed by Reliance Infrastructure in payment of the amounts due to RIL under the invoice for gas supply during the first fortnight of September 2009,” an RIL spokesperson said. Reliance Infra has been getting the gas from RIL for its power plant in Andhra Pradesh in last five months at a price of $4.2 per mBtu and marketing margin of 0.13 per mBtu.

The Anil Ambani group had last week questioned the marketing margin and had informed RIL that it would not pay the same.

“On September 22, RIL has issued a notice to Reliance Infra for suspension of supply of gas to its power plant in Andhra Pradesh. The notice has been issued in accordance with the terms of the gas sale and purchase agreement (GSPA),” the spokesperson added.

Reacting to the notice, Reliance Infra questioned the legality of RIL’s warning for not paying an illegal marketing margin. “Until this bonafide and genuine dispute with regard to legality of marketing margin is resolved, you are not entitled to suspend the operation of the GSPA or disrupt supplies,” Reliance Infrastructure wrote to Reliance Industries on Thursday. “We are continuing to make the payment of lawful sales consideration at the rate of $4.2 per mBtu and are entitled to receive uninterrupted supply of gas under the GSPA. You (RIL) will be entirely responsible for any loss or damage that will be caused to us as a result of any ill- advised action taken by you for non payment of the illegal charge of marketing margin,” the letter by Anil Ambani company said.