RIL issues notice to Anil firm over gas payment default
Mukesh Ambani-led Reliance Industries (RELIANCE.NS : 2135 +34.05) (RIL) on Thursady said it has issued notice to suspend gas supply to ADAG Group firm Reliance Infrastructure's (Rel Infra) power plant in East Godavari, Andhra Pradesh. The notice has been issued due to payment default of Rs 12 lakh committed by Rel Infra under invoice for gas supplied during the first fortnight of September 2009.
However, Rel Infra clarified that the notice was unwarranted as it was making due payment of $4.20 per million British thermal unit (mmBtu) for gas supply under gas sale purchase agreement (GSPA) and the charge towards marketing margin, which is above $4.20 per mmBtu, is completely illegal and contrary to the provisions of the production sharing contract (PSC). Terming as ''illegal'' these margins, Rel Infra has asked the RIL to withdraw these charges and refund the payments it had made till now.
Rel Infra has been getting the gas from RIL for its power plant in Andhra for last five months at a price of $4.20 per mmBtu and marketing margin of 0.13 per mmBtu. The Anil Ambani group, fighting a legal battle for securing 28 million metric standard cubic meters per day (mmscmd) of gas for Reliance Natural Resources (RNRL (RNRL.NS : 87.15 0)) from RIL at a price of $2.34 per mmBtu under a family settlement, had last week questioned the marketing margin and had informed RIL that it would not pay the same.
RIL spokesperson said, ''The notice has been issued to Rel Infra in accordance with the terms of the GSPA executed between RIL and Reliance Infrastructure. The notice has been issued due to default committed by Rel Infra in payment of the amounts due to RIL under the invoice for gas supply during the first fortnight of September 2009.''
However, Rel Infra in its letter of September 22 had told RIL that its GSPA was not a result of any marketing undertaken by RIL or any agency and ''since there has been a complete absence of any marketing, the charge in respect of marketing margin is clearly unwarranted. Rel Infra had signed the GSPA in accordance with the gas allocation made to it by the government, along with over 40 other customers for supply of gas from RIL's K-G D6. The issue of marketing margin, which according to sources all the customers were paying, was raised by Anil Ambani group firm within days of filing reply to RIL's plea before the Supreme Court wherein the Mukesh Ambani group firms stated that it was not in a position to supply gas at $2.34 per mmBtu due to the government policies.
The government also filed a special leave petition (SLP) on this issue asserting its right on distribution and pricing of the fuel and the Supreme Court will commence hearing on October 20 on all these issues.
Rel Infra argued that the sale consideration charged by RIL in the name of marketing margin was not even shared with the government. ''You are therefore requested to withdraw the charge towards marketing margin immediately. We request you to refund with interest the marketing margin that has been collected by you without any authorisation,'' R-Infra had said. The company added that it would not make any such payments henceforth.
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