PMS Prasad: we'll make an effort to reach out to RNRL

RIL executive director PMS Prasad, a long-serving hand since the late 1980s, has been the company’s public face all through the gas battle — whether at Court Room No 1 at the Supreme Court, or the corridors of Shastri Bhavan that houses the petroleum ministry. Prasad was present on Friday too as the drama was about to be capped in the Supreme Court. ET caught up with him immediately after the judgement

What is it that came to your mind when the judgement was announced?

Relief! That it’s all over.

Who was the first to congratulate you after the judgement?

My boss Mukesh Ambani. He said it was a good job done and we need to get back to work. I also got a call from Mrs Ambani, who said we have to move on to the next generation of value creation.

How is Monday 9 am going to be different?

It’s going to be a different day. We are relieved of the tension. We have to get down to business and begin negotiations with RNRL.

Is this the best judgement?

Under the given circumstances, one could not hope for a better judgement.

How do you plan to go about negotiating the agreement with RNRL?

We have to negotiate a fresh gas sale and purchase agreement, which has to be bound by the broad parameters laid down by the court. Any fresh gas sales purchase agreement will have to uphold the price approved by the government, honour the utilisation policy of the government and various empowered Group of Ministers’ (eGoM) decisions with regard to utilisation.

What are the parameters that you will need to thrash out with RNRL?

The issues will include other parameters of GSPA like liability, penalty, alternative arrangements for fuel, the quantity of gas, quality of gas, etc. We have already concluded GSPA with several consumers and this GSPA will have to be similar to those.

Did the court mention the family MoU?

Yes. Although the court held the production-sharing contract was supreme, it directed RIL & RNRL to renegotiate in the context of the existing MoU; more like the MoU being a backgrounder under which we could renegotiate. But at all times, it is the supremacy of the PSC and the government decision that have to be kept in mind.

How long will you have to reach that agreement — do you have a timeframe?

We have to go back to the Mumbai HC within six weeks and then if we can mutually agree to a GSPA, it will need to be verified and approved by the government.

Are you saying RNRL & RIL can possibly be business partners where RIL is the gas seller and RNRL the buyer?

Yes! There is every possibility that we will work as partners and we will make a genuine effort to reach out and settle this GSPA in accordance with the court order and government law.

So, what is clear is that you are willing to provide gas at $4.2 mmBtu if the government approves the contract.
Yes, that is the price we will start negotiations at.

What are the key takeaways of today’s verdict?

It is clear that we have to follow all government policies and eGoM decisions and the PSC is the basis for all contracts. Secondly, the court order has also made it clear that the government has the right to determine prices and allocate the gas as per national interests. It has in a way only reaffirmed what the government has been saying. Thirdly, by directing us to renegotiate, but referring to the family MoU, the court has asked both RIL and RNRL to initiate talks and take action within six weeks.

How do you think this order will be received by investors, particularly global oil majors?

We expect the government to come out with a clear policy, which will state all that the verdict has said so that investors have complete confidence in consistency of policies. If companies like Exxon, Chevron and Shell can go to countries like Nigeria or Venezuela where there is so much political uncertainty, there is no reason why investors should not come to India.

Any regrets?

Yes. Too much time was wasted. There is not a single decision that the government has taken in the last seven months. And institutions like the Director General of Hydrocarbons, the petroleum ministry and even the CAG have suffered a huge reputation damage. And as for the advertisements in the newspapers where it was said that the petroleum minister was in RIL pockets.(laughs) I constantly looked for him but didn’t find him. We need to get back to business, value creation and positive thinking.

Source:http://news-views.in/pms-prasad-well-make-an-effort-to-reach-out-to-rnrl/

Ambani Gas Row: Government emerges triumphant!

Two judges of a three-member bench delivered separate verdicts on the ongoing Ambani gas row between Mukesh Ambani's Reliance Industries and younger brother Anil's Reliance Natural Resources. The case involves terms of a deal under which Reliance Industries was to supply Anil Ambani's Reliance Natural with 28 million standard cubic metres a day (mmscmd) of gas for 17 years at a rate below the government price.

Reliance Industries CMD, Mukesh Ambani had argued the private deal cannot take precedence over government policy, which determines who can receive gas and at what price.

RNRL’s Anil Ambani, who claimed otherwise, rolled out a series of front-page advertisements in major newspapers accusing the government of taking the side of Reliance Industries.

Agreeing with RIL’s argument, the Chief Justice of India issued a final verdict that said a memorandum of understanding between the two brothers signed in 2005 is not binding on RIL, a government contract over-rides all private agreements. SC has asked both brothers to sit down and re-negotiate the gas supply master agreement (GSMA) and then come back to the Court in 6 weeks. The verdict further said that gas is a national asset and belongs to the government till delivered to the consumer. The court said it will give its direction in 8 weeks.

The verdict means that the re-negotiation has to take place within the ambit of the government’s policy. Further the judgement adds that the government regulation must dictate the renegotiation plan and RIL and RNRL should renegotiate under government rules.

Minutes after the Supreme Court declared the verdict in favour of RIL, in the Ambani Gas Row, Oil Minister Murli Deora welcomed the move and called it a vindication of the Govt's stand. "The Govt is satisfied with the verdict. The Govt has the power to decide the price of gas and the power to allocate."

Oil Secy S Sundareshan added, "Right from the beginning, the Ministry has been saying that gas is the property of the nation, and we believe the court has upheld the terms of the Production Sharing Contract."

"Now there is complete clarity on gas policy and the decision of the Bombay High Court has been quashed. We will continue to regulate gas pricing and policy in future." However, he also said that he was unaware of what has to be renegotiated in the case.

Source:http://reliance-news.blogspot.com/2010/05/ambani-gas-row-government-emerges.html

Mukesh Ambani’s points were in line with Supreme Court verdict

India's top court has given a unanimous verdict today on the Ambani gas row upholding the government’s right to determine gas-pricing. The Supreme Court had finally given a judgment on the gas-pricing dispute between the Ambani brothers that has raised concerns over the government policy on gas pricing for India’s upcoming energy based economy and rattled investors.

The verdict delivered by Judge Sathasivan and supported by all others with Reddy disagreeing only on one minor point. The case in the Supreme Court was heard by a three-judge bench. Two of the judges have delivered separate verdicts and majority opinion prevailed. This judgment is based on the basic fact the gas is a public good and belongs to the government and its people.

Mukesh Amabani’s point that he could not go against the government’s Production Sharing Contract has been re-iterated by the government. As an extension of the judgment Anil and Mukesh Ambani have been given six weeks to renegotiate the contract that forces RIL to sell gas to RNRL. The judge said that a government contract over-rides all private agreements and the memorandum of understanding between the two brohers signed in 2005 does not stand.

The Chief Justice has signed the verdict on the RIL RNRL gas row delivered by Justice Sathasivan. The verdict says that both brothers must sit down and re-negotiate the gas supply master agreement (GSMA) and then come back to the Court in 6 weeks. The verdict further said that gas is a national asset and belongs to the government till delivered to the consumer. The court said it will give its direction in 8 weeks.

The previous MoU has stood to be in contradiction with the government policy as well as the Production Sharing Contract. The re-negotiated agreement between RIL and RNRL will have to be reworked within the ambit of the government’s gad pricing policy. Further the judgment adds that the government regulation must dictate the renegotiation plan and RIL and RNRL should renegotiate under government rules.

Source:http://www.reliance-news.com/mukesh-ambani/mukesh-ambani%E2%80%99s-points-were-in-line-with-supreme-court-verdict/