Oct. 19 The corporate battle between the Ambani brothers will reach the last stage of a legal face-off on Tuesday. The Supreme Court will begin the final hearing on the case. At stake is revenue close to $28 billion.

The dispute started due to a demerger pact between Mukesh and Anil on natural gas supply from Mukesh Ambani-led Reliance Industries Ltd (RIL) to Anil Ambani group company, Reliance Natural Resources Ltd (RNRL).

RNRL is suing RIL for not honouring its commitment of 2005 for supplying 28 mscmd of natural gas from the Krishna-Godavari Basin D6 block at $2.34/mBtu.

RIL’s stance

RIL is maintaining that it neither has the marketing freedom nor the authority to supply gas to RNRL at subsidised rate, as the Government has determined a price of $4.2/mBtu and also allocated the gas according to the utilisation policy.

If the valuation and selling price of gas is taken at $4.2/mBtu then the Government earns $14.9 billion and the contractors (RIL and Niko) make $11.5 billion through the life of the field. But, if the valuation and selling price of gas is taken at $2.34/mBtu then both the Government’s and the contractors’ earnings will fall to $4.2 billion and $5.3 billion, respectively.

However, if the price of the gas is taken at $4.2/mBtu for valuation purpose and the selling price is taken at $2.34/mBtu then the Government earnings stand at $14.9 billion and the contractors make a loss of $5.4 billion.

Issues

Some of the issues likely to be argued before the Apex Court include the question whether a family MoU can be given priority over the production sharing contract (PSC) and if a contractor has marketing freedom for sale of gas?

In June, a Division Bench of the Bombay High Court upheld RNRL’s position on the gas issue with RIL, and ordered that the dispute be resolved in a month through a fresh arrangement.

Timeline

RIL on July 4 moved the Apex Court challenging the Bombay High Court judgment asking it to supply gas to RNRL at 44 per cent lower price than fixed by the Government. On July 19, the Government stepped in and filed a petition in the Supreme Court saying gas is national property. The matter is posted for hearing on October 20.

In another development, the Government told the Apex Court on Monday that its legal rights were affected by the Bombay High Court order in the matter.

The Government said this in its rejoinder to an affidavit filed by RNRL in the RIL-RNRL case.

Keep keen watch on both the stocks as soon the decision will out the favoured stock will rock 2de...