RNRL won’t become a shell company, says CEO
10 May 2010
Commenting on Friday's Supreme Court ruling in favour of Mukesh Ambani's Reliance Industries Ltd and against brother Anil's Reliance Natural Resources Ltd, J P Chalsani, chief executive officer of Reliance Power (an RNRL company), said the interest of both shareholders must be balanced.
"The new scheme must keep the interests of Reliance Natural Resources, the government, and Reliance Industries shareholders in mind,'' Chalsani, said in an interview to CNBC-TV18.
The court had ruled that the gas production sharing agreement supersedes all other documents, including the Ambani family memorandum of understanding. Later, Anil Ambani said his group has no plans to file a review petition currently, but would like to renegotiate with RIL to iron out the loopholes in their agreement.
Chalsani said the next step is clearly in the stage of renegotiation. The apex court has said that the Ambani MoU is not binding, but it can be a guiding force in renegotiation. He feels there is lot to negotiate with RIL under the provided framework.
Chalsani said that RNRL will not become a shell company, and the gas price will not impact the business model on RNRL. "RNRL is not going to trade the gas. So the gas price does not impact the business model of RNRL. If anything, its business model has strengthened post the case," he claimed.
''We have on affidavit stated that we are not going to trade the gas. We have clearly said that if you get the gas at 2.34 the cost of power is going to be cheaper, if you get gas at a higher price, the cost of gas is going to be expensive. Depending upon what's the cost of gas that's going to come, it's going to be passed on. So as far as RNRL biz model is concerned, I don't think there is need for change, irrespective of what's the price of gas. It gets gas and supplies it to others and that arrangement is still going to continue,'' Chalsani said.
He added that gas supply to power generation is a must to maintain growth rate of India.
