The suspense over Reliance Industries’ gas supply deal from its KG basin fields with NTPC continues with the government counsel defending his stand in the court that no formal agreement between the two was ever signed.
The government’s legal counsel, T.S. Doabia, wants the Petroleum Ministry to stick to a statement made last week in court where it claimed that Reliance Industries and NTPC never had an agreement on the price at which gas from KGD6 should be sold to NTPC.
The reason why the content of this letter is problematic for the government is because it had suddenly told the court during a hearing of a case between Anil and Mukesh Ambani that the younger brother cannot cite the agreement between NTPC and RIL in his fight for cheap gas since no such agreement existed.
The government said last week that RIL's offer to NTPC cannot be used as a benchmark. Earlier the government claimed that Reliance offered gas to NTPC at $2.34/mmbtu which RIL had retracted from. In any case the government had claimed in court that the NTPC rate was never approved.
RIL's offer to NTPC cannot be benchmarked by RNRL and RIL had offered gas at $2.34/mmbtu to NTPC as NTPC rate has not been approved by the government.
However, the government is also fighting its own case in which NTPC wants cheap gas from Reliance as per the so called agreement which now doesn’t exist according to the government. This is a stand which the legal counsel is asking the Petroleum Ministry to stick to. If that happens, the NTPC case against Reliance is as good as dead.
The government’s flip-flop on this entire issue clearly highlights the tight spot that it has put itself into. But on the other hand, it also wants RIL to begin production from its fields in September that would nearly double India’s current output.