Wednesday, September 2, 2009

oil ministry backs down on family mou

In damage limitation exercises, newly appointed RIL ED PMS Prasad may be flying journalists to the KG Basin to give them an update on the gas opera, but with the government amending its Special Leave Petition, it is now crystal clear that the case to be heard before the Supreme Court will focus on the same two issues - interpretation on the price of gas and the gas utilisation policy, as was the case before the Bombay High Court earlier. All manner of tweaking that the oil ministry tried to give the case has been summarily dropped due to the incessant media pressure from RNRL.

The Bombay High Court had asked RIL to supply 28 million units per day at $2.34 for 17 years, against which RIL appealed to the apex court. Now the key here is that the RNRL-RIL contract was signed before the gas utilisation policy which the oil ministry in its fresh appeal to the SC wants set aside. Even more categorically the decks have been cleared for the protection of NTPC's interests, something that RNRL and other group shareholders were asking for through a media blitz which culminated in a a series of adevrtisements in all small and big newspapers. The EGoM of September 12, 2007 had approved the gas price of $4.2 per million unit at a crude price greater or equal to $60 per barrel.

The entire handling of this gas row by the oil ministry has deeply embarrassed the government. Now that a new EGoM is being constituted, it would be right for Murli Deora to distance himself from this unseemly row and allow the government to direct the oil ministry to simply allocate the requisite amount of gas to NTPC on a nomination basis so that Kawas and Gandhar can be kick started. This will render the NTPC-RIL case infructuous and resolve one part of this quadrangular fight.

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