RIL offers to make KG gas MoU public...

Mukesh Ambani-promoted Reliance Industries (RIL) today agreed to produce the June 2005 memorandum of understanding (MoU) signed between the warring Ambani brothers if the Bombay High Court hearing the dispute between RIL and Relaince Natural Resources (RNRL) sought the family agreement. The MoU forms the basis of the separation of the undivided Reliance Industries between the two brothers.

RIL’s statement comes in the wake of the Bombay High Court seeking details of the gas sale master agreement (GSMA) portion of the MoU (family agreement). “We would like to know what the MoU contains as far as the GSMA is concerned. We would not want to see the entire MoU,” the court observed today.

RIL’s change of stance is significant for the case as all this while it has maintained that there was no MoU between the brothers. Presenting his case in July, Harish Salve, the senior counsel for RIL, had dubbed the agreement between the brothers as a ‘ghost MoU’ (as no one has seen it).

“The MoU between the brothers is in the private domain and has never been produced in the court. Agreements between the brothers were entered into on the basis of negotiation and decision on the case cannot be taken on this basis,” Salve had told the division bench of Justices J N Patel and K K Tated in July.

However, in response to the court’s observation today, RIL counsel Milind Sathe asked RNRL to file an application in the court regarding production of the MoU, adding: “The MoU is not binding on the companies. It is unknown to the law.” To this, Ram Jethmalani, the senior counsel for RNRL, said, “The original MoU is with Cyril Shroff, who is a lawyer to RIL and Kokilaben Ambani.”

The June 2005 agreement between the Ambani brothers was the basis for the split in the Reliance Group. While Mukesh Ambani got RIL, younger brother Anil Ambani got Reliance Capital, Reliance Communications and Reliance Energy.

According to the June agreement, 28 million cubic metres of gas per day from RIL’s KG basin fields would be allocated to Reliance Energy for its upcoming power plants at a price of $2.34 per mmBtu. It would also be allotted another 12 million cubic metres of gas if an earlier agreement between RIL and power major NTPC fell through. Besides, ADAG will have the first right of over 40 per cent of all future gas discoveries made by RIL.

Later during the arguments, Jethmalani added: “Mukesh Ambani backed out of the gas supply obligations to RNRL and NTPC when he observed a sudden spurt in gas prices during December 5.”

Mukul Rohatgi, who is also representing RNRL, added that RIL is robbing the government of the gas by showing a four-time increase in capital expenditure from Rs 10,000 crore to Rs 45,000 crore, so far.

The case has been adjourned for September 30.

“The lion’s share of the gas will be taken away by RIL by showing an increase in the cost. This is another way RIL would extract huge amount of gas. How can the capital expenditure increase four times for extracting the same amount of 80 mmscmd of gas,” Rohatgi asked.

Counsels for both the parties said they would submit the MoU if directed by the court in the next hearing. Government counsel T S Doabia is expected to argue in the next hearing and he did not make any statement regarding his previous remark that NTPC does not have a “concluded contract” with RIL.

Source: Business Standard