The Bombay high court on Monday ordered Mukesh Ambani's Reliance Industries Ltd (RIL) to assure gas supply of 28 million metric standard cubic metre per day (mmscmd) from Krishna-Godavari (K-G) basin D6 block to Anil Ambani promoted Reliance Natural Resources Ltd (RNRL) for 17 years at $2.34 million metric British thermal unit (mmbtu).
While asking RIL to arrive at mutual agreement on this lines with RNRL, the court also said that Ambani brothers can consult their mother if there is any difficulty in arriving at a conclusion, which is permitted as per the MoU.
Shares of RNRL surged 20 percent at Rs 105.60 while RIL shares fell 6.40 per cent at Rs 2,260 in todays trade.
DAG claims right over 70 per cent of KG-D6's initial output of 40 million standard cubic meters per day after the family split in in June 2005. After the split Mukesh Ambani took control of RIL and Anil got financial services, communications and power business of the group through a series of demerger of firms.
As per the MoU, RIL was to supply gas from its KG basin to RNRL for its upcoming 7400 MW power project at Dadri in Uttar Pradesh.
In December 2006, RNRL moved the Bombay High Court asking it to compel RIL to honour the gas agreement. Justice Anup Mohta, who heard the case, asked the companies to settle the matter internally under the June 2005 family agreement. The judge also restrained RIL from selling gas to third parties till the final order.
Unable to agree on the price, terms and quantity of gas, both firms approached the division bench of the Bombay High Court against the order of the single bench in early 2008. The hearing of the matter continued till February 2009. Thereafter, the division bench came out with an interim order allowing RIL to sell gas to third parties.
The interim verdict also mentioned that RIL's gas agreement, however, was subject to the court's final order.
The basic argument in the RIL-RNRL case pertained to the pricing and quantum of gas. During the course of hearing, RNRL made it clear that it wanted 28 million metric standard cubic meters per day of gas for 17 years for $2.34 per million metric British thermal unit (mmBtu), while RIL argued that it could not sell gas below the government-approved price of $4.2 per mmBtu.
