Government has sole right to fix gas price: Reliance Industries

Mukesh Ambani-led Reliance Industries told the Supreme Court Tueday that it was a mere contractor appointed by the government to explore and harness natural gas from the Krishna-Godavari basin and the state remained the real owner.

Resuming his argument before a three-member bench, Harish Salve, counsel for Reliance Industries, said the company's role was restricted to interpreting various clauses of its production sharing contract with the government.

The contract empowers the government to do anything with the gas, including the fixing of price and determining the buyer, Salve told the bench, comprising Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice E. Sathasivam.

He said Reliance Industries had neither the independent freedom nor the right to fix the price of natural gas, and was was only entitled to earn requisite profits from the sale of hydrocarbon.

The apex court has been hearing the dispute over natural gas between Reliance Industries and Anil Ambani-led Reliance Natural Resources.

The dispute is over the supply of 28 million units of natural gas for 17 years at $2.34 per unit to Reliance Natural Resources from the Krishna-Godavari natural gas fields, off the Andhra Pradesh coast, awarded for exploration and harnessing to Reliance Industries.

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

The dispute was first heard in the Bombay High Court that gave its verdict in favour of Reliance Natural Resources. But this was subsequently challenged in the apex court by the Mukesh Ambani-led firm.

Last updated on Nov 10^th, 2009 at 14:09 pm IST--IANS