Tuesday, November 17, 2009

RNRL's price to cause $12 bn loss for govt: RIL

RIL on Friday told the Supreme Court that if RNRL’s claim for gas sale price of $2.34 per unit was accepted, it would cause a loss of around $12 billion to the government and down its own profits by over $5 billion.
RIL’s counsel senior advocate Harish Salve argued before a Bench comprising Chief Justice K G Balakrishnan and Justices B Sudershan Reddy and P Sathasivam that the gas price was fixed as per the terms and conditions of the production sharing contract, the gas utilisation policy and the decisions of the empowered group of ministers.

There could not be a situation where RIL would be supplying gas at $2.34 to RNRL for the latter to indulge in its trading while the government, which is the owner of the gas, and the company which extracts the gas, were to suffer losses.

Presenting a comparative chart taking the unit selling price of gas at $4.2 and $2.34, Salve said at the higher price, the total cash flow to the government would be $15.29 billion and to RIL $7.95 billion.

Also Read
 → RIL offers to withdraw directors' affidavits on MoU
 → Gas row: MoU gives ‘decisive’ powers to Kokilaben, says RIL
 → Gas row: RIL says RNRL can't trade in gas
 → RIL-RNRL dispute can’t be sorted out without govt role: Salve
 → No out-of-court settlement with RNRL, says RIL

However, if the sale price was $2.34 per unit, then the total cash flow to the government gets drastically reduced to $3.84 billion and that to RIL gets curtailed to $2.43 billion, he said.

While stressing on the loss to the government exchequer, he also said that if RIL for its $9 billion investment was to get only $2.43 billion profit in 13 years time, then it was not worth doing business.

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