SC to examine RIL- RNRL controversy on July 20 7/8/2009

  The Supreme Court decided to examine on July 20 the controversy regarding the fixation of rate for supply of natural gas by Reliance Industries Limited (RIL), belonging to Mukesh Ambani group and Reliance Natural Resources Limited (RNRL), owned by his brother Anil. A bench comprising Chief Justice K G Balakrishnan and Justice P Sathashivam issued notices on the cross appeals and fixed July 20 for hearing of the two petitions when the petitions were mentioned today before the Supreme Court for early hearing. The apex court also directed that the Government of India should also be made a party. A family settlement was arrived in June 2005 between the two brothers in the presence of their mother Kokila Ben under which RIL was to supply natural gas from its Krishna Godavari Basin to Dadri power project of RNRL, for 17 years at the rate of 2.34 dollar per unit (Rs 112.80 per unit). Mukesh Ambani group, however, approached the government authorities for revision of gas prices and the Union Government raised the price of natural gas at 4.84 dollar per unit(Rs 280 per unit). Anil Ambani group challenged the government’s decision in the Bombay High Court. The High Court on June 15 allowed the petition of RNRL and directed RIL to supply gas to Dadri power project at 2.34 dollar per mmbtu in terms of the settlement of June 2005. The High Court had also directed the two brothers to resolve the controversy. Both the Reliance Industries Limited and Reliance Natural Resources Limited (RNRL) have approached the apex court. Mukesh Ambani group has prayed to the Supreme Court to set aside the June 15 High Court judgment while Anil Ambani group has prayed for modification of the High Court order to the extent of dropping the direction for negotiations and has sought direction to RIL to start supplying gas to its project as per the High Court order. According to RIL, the international price of natural gas is six dollar per mmbtu and if June 2005 agreement is not revised, the company will have to suffer a huge loss of Rs 3800-4000 crore per year.