RIL seeks gas price order on May 13; third referee named in KG dispute

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The Supreme Court on Tuesday appointed Micha­el Hudson Mc­Hugh, a former justice of the high court of Australia, as the presiding neutral arbitrator in the dispute between the government and the Mukesh Ambani-led Reliance Industries over alleged hoarding of gas in the Krishna-Godavari basin.

Justice McHugh was a non-permanent justice in the court of final appeal in Hong Kong. The septuagenarian McHugh currently works as a mediator and independent arbitrator.

A division bench led by Justice SS Nijjar had on April 2 kept in abeyance its earlier order to appoint another Australian judge James Jacob Spigelman as the neutral arbitrator after the Union government pointed out that the judge topped the list of arbitrators that RIL had proposed.

While former chief justices of India SP Bharucha and VN Khare are the two other arbitrators on the panel on the behalf of RIL and the oil ministry, respectively.

PTI adds: RIL has asked the petroleum ministry to announce a new natural gas price immediately after polling ends on May 12, saying this was necessary to avoid irreparable loss to all parties, including the government.

While a new formula for pricing of all domestically-produced natural gas was notified on January 10 and published in the Gazette on January 17, the poll panel last month asked the government to defer its implementation till general elections are completed.

The new pricing formula, that almost doubles the price of natural gas to about $8.34 per mmBtu, was to be implemented from April 1 but following the directive of the poll watchdog, was put in abeyance till model code of conduct for elections is in place.

RIL said the $4.205 per mmBtu price for gas from its eastern offshore KG-D6 field was valid for the first five years of production, which ended on March 31.

“...The new price as per the guidelines must immediately be intimated once the model code of conduct is not in force i.e. on May 13, which is after the last day of polling on May 12,” RIL president and COO B Ganguly wrote to the oil secretary.

RIL said the $4.205 per mmBtu price for gas from its eastern offshore KG-D6 field was valid for the first five years of production, which ended on March 31.

But since the poll watchdog deferred implementation of the new pricing, the company continues to sell gas at old rate on “provisional basis”, he wrote on April 3.

He said immediate intimation of the new rate after poll code ends on May 12 was “necessary to avoid extended dispute and irreparable loss to all parties to the production sharing contract (PSC).”

“Any other course of action would be in violation of the PSC,” RIL said.

RIL has asked fertiliser firms, its sole consumers, to provide payment guarantees at new rate. Fertiliser firms have, however, refused to do so, saying no new rate has so far been intimated.

“We are seeking adequate comfort in the gas sale purchase agreements (through letter of credit or otherwise) to ensure that once the price is notified, we, on behalf of all the parties to the contract, are able to recover the revised price with effect from April 1,” the company said.

The company said whenever the government notifies the gas price effective from April 1; it would recover the differential price from its customers.

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