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January 13, 2009 11:12 IST
The crux of the ongoing court case between Reliance Industries [Get Quote] (RIL) and Reliance Natural Resources [Get Quote] (RNRL) on Monday was pricing of the gas produced from the Krishna-Godavari (KG) basin.
According to the Gas Sale Master Agreement between RIL and RNRL, the latter is entitled to be supplied 28 million cubic metres of gas a day from the KG basin at a price of $2.34 per million British thermal unit (mBtu) for a period of 17 years.
RIL has refused to supply gas at that price for that period. However, according to RIL's senior counsel Harish Salve, it is ready to supply the gas to RNRL at government-approved price of $4.20 per mBtu.
Justice J N Patel of the division bench asked the government counsel Mohan Parasaran to clarify the price at which gas from the basin would be sold to the government, and also at what price RIL would sell gas to India's largest thermal power operator, NTPC. "We will clarify to the court that the price of $4.2 per mBtu fixed by the empowered group of ministers would apply across the board, whether a private or public entity," Mohan Parasaran told reporters later.
The government's aim is to get the gas sale stay vacated at the earliest as RIL is ready to begin gas production in the last week of February 2009.
The Centre has asked the high court to lift the stay on the sale of gas from the KG basin in the interest of the economy, specially for the benefit of power and fertiliser sectors.
India is a gas deficit country and the gas from KG-basin is expected to almost entirely wipe out the demand-supply gap, according to some projections.
NTPC and RIL are engaged in a legal battle since December 2005 over RIL's claim that it has only signed a Letter of Intent (LoI) with NTPC and does not have a concluded contract with the power company. NTPC, on its part, maintained that it has concluded contract with RIL for the supply of natural gas to its Kawas and Gandhar power stations in Gujarat at a price of $2.34 per mBtu.
The government will file its reply on Tuesday.
The government through an empowered group of ministers (Egom) has approved a price of $4.2 per mBtu for sale of gas from RIL's KG basin fields.
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