Sparks fly over Mukesh, Anil gas deal

Anil also claimed that Mukesh was supposed to hand over control of RNRL to him by January 25, 2006. ‘‘However, the above transfer of control and management has not been implemented till date, and the board of RNRL consists of three directors, two of whom are nominees of RIL, and one of Reliance-ADAG,’’ said a statement issued by RNRL director JP Chalasani, who represents the Anil Ambani group in RNRL.

This new twist in the gas supply agreement between the two brothers comes at a time when RIL is also fighting a case against NTPC on the gas supplies to its projects. The Anil Ambani’s group claims that they are entitiled to at least the same conditions that NTPC gets for gas supplies from RIL.

On January 12, the gas deal has been signed between RIL and RNRL—which was under the control of RIL—with the approval of RIL nominees on the RNRL board. Reliance Industries did not comment on Anil’s latest salvo saying they have not yet received a copy of Anil’s statement to the media.

‘‘Once Reliance-Anil D Ambani Group gets control and management of RNRL, steps will be taken to have the agreement executed as suitably amended, so as to bring it in line with the agreed position,’’ Chalasani’s statement said.

“This statement is being made in the interests of transparency and full disclosure, in view of the incomplete, incorrect and misleading reports that have appeared in the media today,” Chalasani said.

The statement said the main points agreed between the brothers as per the settlement of ownership issues in flagship RIL had specified that after the NTPC entitlement (for 12 MMSCMD), Anil will get a firm supply of 28 MMSCMD of gas from RIL, which is the base volume.

“If for any reason, the NTPC contract does not materialise, or is cancelled, its entitlement of the aforesaid 12 MMSCMD will also go to Reliance-ADAG, in addition to the 28 MMSCMD, thereby making an aggregate base volume quantity of 40 MMSCMD. The price and commercial terms for the aforesaid gas supply will be no worse than those applicable to NTPC,” it said.

Fifty per cent of the base volume gas (28 MMSCMD, or 40 MMSCMD, as the case may be) is committed to be supplied by RIL to Reliance ADAG in 2008-09, and the balance in 2009-10.

Thereafter, from the entire future reserves of RIL (including new discoveries of gas from new explorations, and/or bids as may be submitted from time to time), Reliance-ADAG will have the first option to get 40 per cent quantity of gas (option volume gas).

The agreement said supply of option volume gas will be at market rates and gas can be used for all projects of Reliance-ADAG. The gas supplied will not be used for trading, other than trading within Reliance-ADAG and swapping of gas will be permitted, the statement said.

For base volume of gas, Reliance-ADAG will have the option to set up its own pipeline, but will have to pay the transportation costs, even if does not use RIL’s East-West pipeline. However, in that situation, Reliance-ADAG will have the right to deal with the unutilised pipeline capacity, as it deems fit.

Gas supply agreements to be entered into for both, base volume and option volume, will be in accordance with best international practices, and will be such as are bankable in international markets.