In a major relief to Mukesh Ambani-led Reliance Industries Ltd [Get Quote], the Bombay High Court Friday allowed the sale of gas from the Krishna-Godavari basin at $4.20 per million British thermal unit (mBtu) and reserved final judgment on a case brought by Anil Ambani-run Reliance Natural Resources Ltd [Get Quote].

RNRL has been seeking gas from RIL on the same terms it had agreed with state-run power company NTPC Ltd--at $2.34 per mBtu.

The court vacated an interim order that restrained the company from selling gas to any party other than RNRL and NTPC and allowed the company to sell gas to government-nominated companies or public sector units in line with the gas utilisation policy approved by an empowered group of ministers.

The timing of the order, which is subject to the court's final judgment, is opportune for RIL, which is slated to begin gas production next month on the east coast of India.

The court's order says RIL is free to sign contracts with gas purchasers under the terms of the EGoM decision for up to five years.

"The court has passed the order without prejudice to any of the rights and contentions of the parties (RNRL and NTPC) involved in the case," Mohan Parasaran, the additional solicitor general of India who is representing the government in the court, told reporters outside the court.

"The order is purely an urgent measure to allow sale of gas in the interest of the nation," he added. India is a gas-starved country with many fertiliser and power plants working at sub-optimal capacity or not at all due to lack of gas.

Commenting on the order, Mukul Rohatgi, senior counsel RNRL said, "Our rights are fully protected with the orders passed today and this is not a disappointment to us. We know that the gas has to come out and be consumed." 

The order will give a major fillip to power and fertiliser plants, which consume 70 per cent of the gas available in the country and are on top of the government's priority users.

The gas will bring down the cost of the power by 60 per cent. The KG basin gas is expected to cost $7 per mBtu, after adding transport and taxes.