The government, which will be earning close to $9 billion from RIL, as part of its profit share, is likely to intervene in the RIL vs
The gas policy, which was put in place soon after the government approved RIL's price of $4.2 per unit as per a directive by the empowered group of ministers (eGoM), provides for fertiliser companies to get the gas first, followed by power plants that are sitting on idle capacity for want of gas. This allocation policy has been the basis to provide gas to RIL's first set of consumers. However, this policy will not hold good if RIL gives the gas to RNRL.
The court order directs RIL to sell gas to RNRL, which in turn will sell it to its affiliate, Reliance Power. At present, R-Power does not have any gas-based plant; therefore, the company has two options: either to use it as fuel for the proposed power plant at Dadri, which is yet to come up, or to buy an existing one. And, selling gas to a new power plant is not allowed under the present gas utilisation policy.
Moreover, if RIL has to give 28 mmscmd to RNRL, it will be left with very little gas from its first block of 40 mmscmd gas meant for existing fertiliser and power plants as mandated by the government. It is this contradiction that may force the government to step in.
The government had earlier intervened in the dispute in October last but then withdrew two months later, after the court directed that third-party gas sales could start. What is although not clear is how the government will intervene in the case, which is now likely to be taken to the Supreme Court.
Senior petroleum ministry officials, who spent a large part of the day trying to understand the implications of Monday's high court order, said that allocating gas to RNRL will be against the basic principles of the gas allocation policy. The court has directed RIL to sell 28 million standard cubic metres of gas to Reliance Natural Resources at $2.34 per million British thermal unit (mmBtu).
Petroleum & natural gas minister Murli Deora said: "We are studying the judgement and the government will take the steps which are in the best interest of the nation." According to one of the officials in the oil ministry ET spoke to, the impact of the court's order will be conveyed to the eGoM, chaired by Pranab Mukherjee, and the group would decide on the future course of action.
"The government has specified distribution of the scarce natural resource in certain order in the best interest of the nation. It will defend its gas utilisation policy in an appropriate manner," the official said, requesting anonymity.
The government will protect its share of profit and ensure that priority of gas allocation set by the eGoM is not disturbed. "Fertiliser sector will be worst hit and that would hamper the country's agricultural growth," he said.
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