Reliance Dispute

Based on Krishna-Godavari Basin

Submitted To:
Prof. Nisarg Joshi
Submitted By:
Amit Gurav (B-14)
Sachin Ghulyani (B-
12)

February 19, 2010

Ambani Brother’s Gas Dispute

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 VS
Mukesh Dhirubhai Ambani Group Anil
Dhirubhai Ambani Group

The Krishna Godavari basin dispute is an ongoing dispute

between
Reliance Industries (RIL)
&
Reliance Natural Resources (RNRL)
Over the pricing of natural gas found in the Krishna
Godavari basin

Now, we will see exactly what is Krishna Godavari Basin

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 Krishna Godavari Basin

Krishna Godavari Basin

Around 7 trillion cubic feet of natural gas was discovered by

Reliance in the Krishna Godavari basin in October 2002

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 Partition
In 2005, the Reliance Group was split between

Mukesh Ambani and Anil Ambani.

Hence,

RIL going to Mukesh Ambani

And

RNRL to Anil Ambani

A family pact was made in 2005 in which

RIL was to supply 28 million cubic meters of gas a day

at $2.34 per million units to RNRL for 17 years

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 Controversy and Some Results.

• RNRL's main contention was that RIL should supply gas on

the terms it had agreed with NTPC.

• RNRL was not happy with the terms of the Gas Supply
Master Agreement

• RIL claims that the supply of gas from KG Basin to ADAG was
not part of the division.

• Government Stand on Krishna Godavari Basin

• Government wants early solution to the gas dispute.

• Krishna Godavari basin is a national Property.

• 30 MPs of left front asked the government to take over the

distribution and marketing of gas from Basin.

• RIL has to pay the royalty to Government.

• Government has the right to fix the price & also dictate
whom RIL sell to.

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• Anil Ambani-led Reliance Natural Resources (RNRL) scored a
victory over elder brother Mukesh Ambani's Reliance
Industries (RIL) on Monday in the second round of the high-
stakes legal battle over a gas supply and pricing agreement.

• The Bombay high court directed the parties to honour a June

2005 memorandum of understanding (MoU) between the
two brothers. It asked the parties to complete the
contractual nitty-gritty and enter into a ‘suitable
arrangement' within one month so that RNRL gets an
assured supply of 28 mmscmd (million metric standard cubic
metre per day) gas from RIL's Krishna-Godavari (KG) basin at
$2.34 per million metric British thermal units (mmBtu) for 17
years for its power plant. The MoU envisaged that RNRL
would get gas at the same price set by RIL for NTPC.

• The RNRL camp is happy as the court upheld its contention

that the MoU signed on June 18, 2005 formed the very basis
of the scheme of demerger and the reorganization of the
undivided RIL group's businesses. ‘‘The MoU and its contents
are binding on both parties — RIL and RNRL,'' said a bench
headed by J N Patel in its 324-page verdict as it disposed of
appeals filed by both RIL and RNRL against a company court
ruling which in 2007 restrained RIL from selling gas meant
for RNRL to a third party.

• The court, however, has said that RNRL cannot trade in the
gas it would get but can only use it in its own plant. Once a
‘‘bankable contract'' is signed, the RNRL lawyers said it
would take about 2-3 years to set up a plant. The HC has
said that till a ‘suitable arrangement' is drawn up or till the
scheme takes effect RIL can enter into contract with third
parties for supply of gas. The MoU, which had set out how

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 the gas supply would be made to RNRL, became the bone of
contention in the raging legal battle that started in 2005
with a company petition filed by RNRL for effective
implementation of the Reliance group's demerger scheme.

• Mahesh Jethmalani, also advocate for RNRL, told TOI, ‘‘All

the key issues have been decided in our favour.''

Final Court Verdicts

• Bombay High Court Ordered RIL to supply the gas as

per the original statement.

• The Bombay High Court allowed Reliance Industries to

sell gas from KG basin at the government-approved
price of USD 4.20 per mmBtu as an interim measure,
while reserving judgment on a case brought by RNRL.

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• THE Bombay High Court is likely to deliver the final
judgment over the supply of gas from Reliance
Industries to Reliance Natural Resources (RNRL) when it
re-opens after summer vacation.

• RIL counsel Milind Sathe declined to comment. But RIL

sources said they would read the 324-page judgment
before deciding their future course of action which
could include appealing in the supreme court. There is
a lot in the judicial fine print, said a lawyer for RIL,
which may delay the gas being supplied to RNRL.

----------------------------THANK YOU-----------------------------

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