Oil ministry has compromised NTPC’s rights: RNRL (To go with: Court agrees high gas price will push power, fertiliser costs)

NEW DELHI - The oil ministry has irrecoverably compromised the legal rights of state-run power major NTPC in its battle with Reliance Industries Ltd (RIL) over gas supplies, Reliance Natural Resources Ltd (RNRL) told the Supreme Court Wednesday.

Reacting to an affidavit filed by the oil ministry Wednesday on the Krishna-Godavari basin gas dispute involving Reliance Industries Ltd (RIL), counsel for RNRL Ram Jethmalani said the document had totally compromised the state-run firm’s interests.

“The government has extinguished NTPC in its affidavit, which is also an example of ambiguous writing,” Jethmalani told the three-judge bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam.

“NTPC should come here and confirm whether they are ready to commit suicide,” he said, minutes before the court was to adjourn for the day.

In the much-awaited affidavit, the oil ministry said the price offered by the contractor RIL to NTPC would require scrutiny from the government under the production sharing contract.

This point is relevant since NTPC is also fighting a legal battle with RIL in the Bombay High Court. The price quoted by RIL for supplying gas to NTPC formed the basis on which RIL was also to supply to RNRL.

The three-judge bench of the apex court has been hearing the dispute over the supply of 28 million units of gas for 17 years at $2.34 per unit to Anil Ambani-led RNRL from the gas fields off the Andhra Pradesh coast, awarded to Mukesh Ambani’s RIL.

The price, tenure and quantity were based on a 2005 family pact, but RIL subsequently said it could only sell the gas for $4.20 per unit, as this was the price, the company claimed, fixed by the government.

The Bombay High Court had earlier ruled in RNRL’s favour.

After filing of the affidavit Wednesday, Solicitor General Gopal Subramanium, appearing for the oil ministry, told the court that he would also like to file an additional affidavit.

Reacting to this, another RNRL counsel, Mukul Rohatgi, pleaded before the court to let him speak Thursday so that RNRL could respond to him as well as other assertions made in the affidavit.

Rohatgi, nevertheless, told the three-judge bench that the price of the gas to be supplied by RIL to NTPC was not an issue in the Bombay High Court.

The case in the high court pertains to the quantity of liability that RIL will have to incur in case it stops gas supply due to some eventuality or otherwise, the RNRL counsel contended.

In the affidavit filed with the apex court, the oil ministry said the Bombay High Court also needed to establish the legal rights of NTPC in its contract with RIL.

But Rohatgi said even this submission goes against the interests of NTPC as its main contention is that it already has a valid contract with NTPC and moved the high court for specific directions to RIL to implement the contract.

The affidavit, though, has also testified that as and when NTPC makes a request for the supply of the gas, the oil ministry would consider the request as per the provisions of the government’s production sharing contract with RIL.

To this point, RNRL counsel said NTPC had requested the oil ministry July 13, 2007 to approve the price of $2.34 per unit quoted by RIL in its bid to supply the gas.

But the oil ministry, however, had then told NTPC that it would be RIL and not the power utility that would approach the government for price approval, Rohatgi added.