Corporate greed…RIL firing from Deora shoulder: Anil
Anil Ambani lashed out at the Petroleum Ministry and Reliance Industries,controlled by his brother Mukesh,over the gas supply issue.
Reliance Natural Resources Ltd chairman Anil Ambani lashed out at the Petroleum Ministry and Reliance Industries Ltd RIL,controlled by his brother Mukesh,over the gas supply issue in an emotionally charged speech at RNRLs annual general meeting here today.
Although the matter is sub-judice,Ambani said,It is a plain case of corporate greed. He was referring to RIL going back on its contractual obligation to RNRL to sell gas at 2.34 per mmbtu as the company now wanted to sell gas at the government-determined price of 4.20 per mmbtu.
He came down on the Petroleum Ministry alleging it was partisan and helping RIL slip out of its contractual obligations. The Petroleum Ministry knew about the RIL-RNRL gas supply contract since 2005. However,its stance has been biased from 2006,surprisingly,coinciding with changes in the Ministry and I fail to understand the reason for this belated intervention, Ambani said.
The Ministry,which is under Murli Deora,has sought annulment of the gas supply contract between RIL and RNRL in the Supreme Court. The ministry is unilaterally taking a stand against Cabinet sub-group decisions which is contrary to the governments own replies in Parliament on several occasions. The ministry should terminate RILs production sharing contract PSC if it is aggrieved and not challenge third-party agreements, Ambani said.
To cheers from shareholders,Ambani said it would be a scandal of mega proportions if RIL is allowed to sell gas at 4.20 per mmbtu. RIL is firing from the Petroleum Ministrys shoulder to renege on its commitment to supply gas to state-owned NTPC and RNRL.
Anil Ambani’s AGM speech >>
RIL has no respect for sanctity of contracts as it is disregarding the Bombay HC judgement,which has not been stayed, he said
He said that it was not a fight between two brothers as RNRLs stance would have been the same had any other company not honoured its contractual obligation. People say that there is a history of RIL-RNRL dispute as there is ego,emotions and family,but RIL is doing the same with state-owned NTPC with which it has no issues of ego,emotions or family, he said.
Ambani said that the cost of gas production for RIL from KG-D6 was only 0.89 per mmbtu and if RIL was allowed to sell gas at 4.20 per mmbtu it would make a profit of over Rs 50,000 crore. Of these profits,the government would gain only 1 per cent while RIL will be the 99 per cent beneficiary. The gas price fixed by the petroleum ministry is exorbitant and since gas prices have crashed by 80 per cent globally,India cannot have such high price. Even at 2.34,RIL will end up making over 100 per cent profits,therefore,it should not be greedy to make super-normal profits, Ambani said.
Half-way through the speech,the RNRL chairman invoked his father and his philosophy of trust and community welfare. RIL wants to make profits at the cost of power and fertilizer users. The higher gas price asked by RIL would mean higher power costs of Rs 1 per unit, Ambani said.
RIL is propagating a myth that there is shortage of gas… they are misinforming the people of India. India will be awash with gas shortly, he added. India now has among the highest short-term gas prices in the world,nearly 30 per cent higher than even in UK and the US,where short term prices are currently hovering around 3.50.
In our view,it would be against public interest to price gas in India for any user above US 1.50. Natural gas should,in fact,be priced substantially lower than US 2 for all power and fertilizer customers. Of course,it is strange that in a democratic country like India,we have to pay for a domestic resource like gas in dollars when the end-users of this resource,the millions of power and fertilizer consumers in this country,pay for it in rupees, he said.
Anil Ambanis Speech
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