Denying allegations of collusion and receiving any favours from the government in the KG basin case, the Mukesh Ambani-led Reliance Industries (RIL) on Wednesday rubbished the CAG report, saying it was based ?on incomplete information? and inferences were ?arrived at without domain knowledge (and) on presumptions?.
RIL counsel Harish Salve told the Supreme Court three-judge bench headed by Justice BS Chauhan that the national auditor had not taken into account the company’s detailed explanation on the issue and the fact that it was in dispute with the government over several issues.
?We still have our reservations about the Rangarajan Committee recommendations on gas pricing,? he said, adding that RIL had clarified to the government that drilling more wells doesn’t lead to more production. RIL argued that the government had ?wrongly? disallowed discovery notifications and compelled it to relinquish five areas in KG basin. ?Far from being a favour to the contractor (RIL), the government has denied contractor its contractual rights under the production sharing contract,? the company said, adding that the KG-D6 pact does not envisage that gas price will be based on costs, but upon a market-determined price. ?The fiscal model of the PSC would be unworkable in any other regime (than market-determined),? it added.
Stating that the company had spent $8 billion on the development of KG-D6 fields, Salve argued that the nature of business was such that exact amount of gas could not be known till production begins and the term ?proved reserves” was an oxymoron and ?probable reserves? was the correct term.
?On proper appreciation of the facts on record, it is clear that there was an over-estimation of the size of the reservoir, applying existing knowledge to the exploratory findings,? RIL said.
It further argued that RIL’s next-door neighbour ONGC is yet to produce even one cubic feet of gas. Salve denied not disclosing any discoveries or costs and said, ?Every rupee of cost has been disclosed?.
It also denied hoarding of gas, saying they were technical and commercial decisions and drilling more wells would not mean more gas as the quantity of gas depends on pressure maintained.
Opposing the two PILs filed by CPI leader Gurudas Dasgupta and Common Cause, an NGO, Salve argued that the courts should not judicially review economic decisions by the government.
The counsel said that the case is not a challenge to the increase in gas prices but relates to denying price increase to RIL in the KG D6 block alone. Besides, it is aimed at foreclosing the arbitration and forcing the government to terminate the PSC under the court orders so that RIL is not left with any judicial redress later. The case will come up for further hearing on April 23.
The PILs had sought directions for a court-monitored probe into the “collusion” between government and RIL and termination of RIL’s gas production-sharing contract for KG-D6 and re-auction of the blocks.
