RNRL litigates in Bombay High Court over RIL's Krishna Godavari Gas Sales

Mumbai: In a retaliatory move against elder brother Mukesh Ambani's letter to telecom firm MTN cautioning that it had the right of first refusal over any stake sale in Reliance communications, the younger brother Anil Ambani's Reliance Natural Resources Ltd. (RNRL) has filed a submission with the Bombay High Court against Reliance Industries Ltd (RIL), which allegedly has signed memorandums of understanding (MOUs) with fertiliser and power companies to sell gas from the Krishna Godavari (KG) basin.

RNRL says that this contravenes the order of Bombay High Court, which prohibited RIL from entering into any contracts to sell gas to third parties, or create any third party interest with respect to the 80 million metric standard cubic meters per day of gas likely to be produced from KG basin in the latter part of 2008. The case is due to come up for hearing on 22 July.

RIL is said to have signed MOUs with almost a dozen power and fertilizer companies across Andhra Pradesh, Maharashtra and Gujarat, which are in the serviceable distance of RIL's East-West pipeline network being set up by Mukesh Ambani's other company, Reliance Gas Transportation and Infrastructure.

If the court order favours RIL, the MOUs could be converted into commercial agreements, and gas from the KG basin would be sold at $4.2 per million British Thermal Units (BTUs), according to the benchmark price approved by the government.

Media reports indicate that RIL could commence commercial production of gas from the KG basin in a few months.

RNRL, on the other hand, says that RIL's MOUs with other companies are in contravention against the previous order of the Bombay HC, which had restrained RIL from entering into any contracts to sell gas to third parties or create any third party interest with respect to the 80 million metric standard cubic meters per day (mmscmd) of gas likely to come from KG basin in the later part of 2008.