The Supreme Court in the battle between the Ambani brothers broadly concluded that the gas, being a national asset is owned by the government, it is up to the government to determine its price and make allocations. The judgment further upheld the provisions of the Production Sharing Contract (PSC) and more importantly the role of EGOM.
Article 21.6.2(b) of the Production Sharing Contract deals expressly with a class of buyers who are nominees of the government and provides that "gas which is sold to the Government or Government nominees shall be valued at the prices actually obtained".
The judgment noted that NTPC invited international competitive bids for supply of natural gas to its power plants to be located at Kawas and Gandhar in the State of Gujarat. RIL (Reliance Industries Ltd.) succeeded in its bid to sell, transport and deliver 132 TBtu (means one trillion BTU (British Thermal Unit) or 1000000 MMBTU). It would be pertinent to note that the Supreme Court in its judgement distinguished the case of NTPC (National Thermal Power Corporation) from that of RNRL (Reliance Natural Resources Ltd.).
In view of this position, the scope of Article 21.6.2(b) of the PSC and the fact that the price was arrived at by an international competitive bidding, it is within the competence of the EGOM to make an allocation of 12 MMSCMD gas (which is a subject matter of an NTPC Global Tender) to NTPC at the price as found by such tender or any other price considered appropriate. In fact, it was on the express understanding that NTPC`s rights would be protected and they would be allocated suitable quantities at a suitable price that NTPC abstained from arguing its case in the Supreme Court. Throughout, the counsel for RIL always showed willingness to settle the matter with NTPC.
Accordingly, Shinde did send a proposal to the EGOM for allocation of 12 mmscmd of gas to NTPC but now that RIL has capped its gas requirement to 60 mmscmd, no alloction was made by EGOM.
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