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The chances of Reliance Industries (RIL) partners BP and Niko Resources getting a higher price for gas from the D1/D3 fields in the KG-D6 block have taken a hit with the government modifying its affidavit in the Prashant Bhushan case in the Supreme Court.
While the earlier affidavit of February 20 quoted the Cabinet Committee on Economic Affairs (CCEA) as having decided that Contractor (RIL, BP and Niko consortium) shall be allowed to sell the natural gas at the revised price formula on the basis of the Bank Guarantee (BG) provided by RIL , the new affidavit seeks to draw a distinction between RIL, BP and Niko.
The affidavit, filed on February 25, cites the original affidavit and instead of Contractor (RIL, BP and Niko consortium) simply talks of Contractor without now mentioning RIL, BP and Niko.
On the face of things, this should not make a difference since all the firms are defined as contractor in the production-sharing contract, but it matters since the oil ministry bureaucrats have taken the view that since only RIL is party to the arbitration with the government the government has withheld payments to the consortium on grounds it was hoarding gas only it could get the higher Rangarajan-formula-based price from April 1.
The oil ministry, sources said, is also waiting for a Supreme Court judgment on the appointment of the third arbitrator in the hoarding case before it takes any decision on whether or not to allow BP and Niko a higher price. Since RIL on behalf of the consortium is asking for a foreigner as the third arbitrator, one view in the ministry is that recognising BP-Niko as party to the case may prejudice it as both companies are non-Indian, this might tilt the balance in favour of a foreign arbitrator.
While RIL had appointed former Chief Justice of India SP Bharucha as its arbitrator, the government appointed former CJI VN Khare as its nominee the two have, however, not been able to agree on a third arbitrator, which is why RIL approached the court to nominate the arbitrator.
Petroleum minister M Veerappa Moily, who had earlier said he was confident of settling the matter soon since it was a technical issue, told FE it is judicial process. The minister could not commit to a time frame for settling it.