ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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How Reliance's Options on Natural Gas Price Hike Narrowed

A clutch of public interest petitions and legal entanglements between Reliance Industries and the Ministry of Petroleum and Natural Gas on the pricing of natural gas and other issues are now before the Supreme Court.A record and discussion of the many legal cases in a battle that is going to be a protracted one.

Why did Reliance Industries Limited (RIL) issue a notice of arbitration to the government seeking an early decision to increase the administered price of natural gas? The company, India’s largest in the private sector, claimed on 10 May that it had “no other option but to pursue this course of action” since RIL – together with its partners, British Petroleum and Niko Resources of Canada – was “unable to sanction planned investments of close to $4 billion” during this year. It can, however, be argued that RIL chose this option because it did not foresee an early resolution to a set of legal disputes pending before the Supreme Court. Nor did it foresee an expeditious conclusion to the arbitration proceedings on the imposition of penalties of $1.8 billion on the company by the Ministry of Petroleum and Natural Gas two years ago.

Whereas RIL and the former petroleum minister M Veerappa Moily did try very hard to push for the implementation of the June 2013 decision of the cabinet that would have almost doubled the price of gas from 1 April 2014 for a period of five years – a decision that was stayed by the Election Commission of India on 24 March – the company’s actions on the eve of the results being declared were clearly influenced and determined by the realisation that the new government (and not the outgoing one) would have to take a call on the contentious issue of hiking the officially administered price of natural gas extracted from the Krishna-Godavari (KG) basin.

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