For this the company has already sent feelers to the empowered group of ministers (EGoM) members seeking further clarity, sources said.

Sources said RIL has informed the government that there is no room for re-negotiation as per the government’s current gas utilisation policy.

Sources close to the development also say that RIL wants the government to play a significant role in renegotiations with RNRL. When contacted, RIL declined to comment on the news.

The Supreme Court had on May 7 rejected Anil Ambani Group firm RNRL’s claim for cheap gas from RIL as had been decided in a private family agreement of 2005. The apex court had directed the two companies to rework gas supply pact keeping the government’s pricing and utilisation policy in mind.

RIL and RNRL are likely to meet formally next week for renegotiations on the family pact that provided for Anil Ambani firm getting 28 million cubic meters per day of gas for 17 years.

Source:http://news-views.in/ril-seeks-clarification-on-gas-utilisation-policy/

<strong>What is it that came to your mind when the judgement was announced? </strong>

Relief! That it’s all over.

<strong>Who was the first to congratulate you after the judgement? </strong>

My boss Mukesh Ambani. He said it was a good job done and we need to get back to work. I also got a call from Mrs Ambani, who said we have to move on to the next generation of value creation.

<strong>How is Monday 9 am going to be different? </strong>

It’s going to be a different day. We are relieved of the tension. We have to get down to business and begin negotiations with RNRL.
<strong>
Is this the best judgement? </strong>

Under the given circumstances, one could not hope for a better judgement.

<strong>How do you plan to go about negotiating the agreement with RNRL? </strong>

We have to negotiate a fresh gas sale and purchase agreement, which has to be bound by the broad parameters laid down by the court. Any fresh gas sales purchase agreement will have to uphold the price approved by the government, honour the utilisation policy of the government and various empowered Group of Ministers’ (eGoM) decisions with regard to utilisation.

<strong>What are the parameters that you will need to thrash out with RNRL? </strong>

The issues will include other parameters of GSPA like liability, penalty, alternative arrangements for fuel, the quantity of gas, quality of gas, etc. We have already concluded GSPA with several consumers and this GSPA will have to be similar to those.

<strong>Did the court mention the family MoU? </strong>

Yes. Although the court held the production-sharing contract was supreme, it directed RIL & RNRL to renegotiate in the context of the existing MoU; more like the MoU being a backgrounder under which we could renegotiate. But at all times, it is the supremacy of the PSC and the government decision that have to be kept in mind.

<strong>How long will you have to reach that agreement — do you have a timeframe? </strong>

We have to go back to the Mumbai HC within six weeks and then if we can mutually agree to a GSPA, it will need to be verified and approved by the government.

<strong>Are you saying RNRL & RIL can possibly be business partners where RIL is the gas seller and RNRL the buyer? </strong>

Yes! There is every possibility that we will work as partners and we will make a genuine effort to reach out and settle this GSPA in accordance with the court order and government law.

So, what is clear is that you are willing to provide gas at $4.2 mmBtu if the government approves the contract.
Yes, that is the price we will start negotiations at.

<strong>What are the key takeaways of today’s verdict? </strong>

It is clear that we have to follow all government policies and eGoM decisions and the PSC is the basis for all contracts. Secondly, the court order has also made it clear that the government has the right to determine prices and allocate the gas as per national interests. It has in a way only reaffirmed what the government has been saying. Thirdly, by directing us to renegotiate, but referring to the family MoU, the court has asked both RIL and RNRL to initiate talks and take action within six weeks.

<strong>How do you think this order will be received by investors, particularly global oil majors? </strong>

We expect the government to come out with a clear policy, which will state all that the verdict has said so that investors have complete confidence in consistency of policies. If companies like Exxon, Chevron and Shell can go to countries like Nigeria or Venezuela where there is so much political uncertainty, there is no reason why investors should not come to India.

<strong>Any regrets? </strong>

Yes. Too much time was wasted. There is not a single decision that the government has taken in the last seven months. And institutions like the Director General of Hydrocarbons, the petroleum ministry and even the CAG have suffered a huge reputation damage. And as for the advertisements in the newspapers where it was said that the petroleum minister was in RIL pockets.(laughs) I constantly looked for him but didn’t find him. We need to get back to business, value creation and positive thinking.

Source:http://news-views.in/pms-prasad-well-make-an-effort-to-reach-out-to-rnrl/

BP has welcomed the decision of the SC upholding the sanctity of the Production Sharing Contract (PSC). It says that Government’s PSC will overwrite all the prior agreements and the MoU between the Ambani brothers is not binding.

Earlier BP had initial talks with RIL for a possible stake in the Krishna-Godavari D6 region. BP was also in talks with RIL to pick up stake in RIL’s exploration and production (E&P) assets. However, the long-drawn battle between RIL and RNRL was a hurdle in the RIL-BP talks.

Sources say that timeframe for the RIL-BP is uncertain due to the Gulf of Mexico crisis.

In the verdict on one of the fiercest corporate battle between the Ambani brothers, the Supreme Court ruled in favour of RIL by 2:1.The SC also declared that RIL and RNRL must renegotiate in six weeks.

Source:http://www.moneycontrol.com/news/business/sc%E2%80%99s-verdict-may-help-further-ril-bp-talks-_457173.html

Mukesh Dhirubhai Ambani on his father\’s philosophy

Reliance Industries CMD, Mukesh Ambani had argued the private deal cannot take precedence over government policy, which determines who can receive gas and at what price.

RNRL’s Anil Ambani, who claimed otherwise, rolled out a series of front-page advertisements in major newspapers accusing the government of taking the side of Reliance Industries.

Agreeing with RIL’s argument, the Chief Justice of India issued a final verdict that said a memorandum of understanding between the two brothers signed in 2005 is not binding on RIL, a government contract over-rides all private agreements. SC has asked both brothers to sit down and re-negotiate the gas supply master agreement (GSMA) and then come back to the Court in 6 weeks. The verdict further said that gas is a national asset and belongs to the government till delivered to the consumer. The court said it will give its direction in 8 weeks.

The verdict means that the re-negotiation has to take place within the ambit of the government’s policy. Further the judgement adds that the government regulation must dictate the renegotiation plan and RIL and RNRL should renegotiate under government rules.

Minutes after the Supreme Court declared the verdict in favour of RIL, in the Ambani Gas Row, Oil Minister Murli Deora welcomed the move and called it a vindication of the Govt’s stand. “The Govt is satisfied with the verdict. The Govt has the power to decide the price of gas and the power to allocate.”

Oil Secy S Sundareshan added, “Right from the beginning, the Ministry has been saying that gas is the property of the nation, and we believe the court has upheld the terms of the Production Sharing Contract.”

“Now there is complete clarity on gas policy and the decision of the Bombay High Court has been quashed. We will continue to regulate gas pricing and policy in future.” However, he also said that he was unaware of what has to be renegotiated in the case.

Source:http://reliance-news.blogspot.com/2010/05/ambani-gas-row-government-emerges.html

The verdict delivered by Judge Sathasivan and supported by all others with Reddy disagreeing only on one minor point. The case in the Supreme Court was heard by a three-judge bench. Two of the judges have delivered separate verdicts and majority opinion prevailed. This judgment is based on the basic fact the gas is a public good and belongs to the government and its people.

Mukesh Amabani’s point that he could not go against the government’s Production Sharing Contract has been re-iterated by the government. As an extension of the judgment Anil and Mukesh Ambani have been given six weeks to renegotiate the contract that forces RIL to sell gas to RNRL. The judge said that a government contract over-rides all private agreements and the memorandum of understanding between the two brohers signed in 2005 does not stand.

The Chief Justice has signed the verdict on the RIL RNRL gas row delivered by Justice Sathasivan. The verdict says that both brothers must sit down and re-negotiate the gas supply master agreement (GSMA) and then come back to the Court in 6 weeks. The verdict further said that gas is a national asset and belongs to the government till delivered to the consumer. The court said it will give its direction in 8 weeks.

The previous MoU has stood to be in contradiction with the government policy as well as the Production Sharing Contract. The re-negotiated agreement between RIL and RNRL will have to be reworked within the ambit of the government’s gad pricing policy. Further the judgment adds that the government regulation must dictate the renegotiation plan and RIL and RNRL should renegotiate under government rules.

With an estimated cash generation of $14 billion over two years and cash equivalents of over Rs 20,000 crore, analysts believe RIL will continue to look for sizeable investment opportunities going ahead. What’s equally exciting is that its fortunes are expected to improve on the back of the rise in margins in the refining business, and higher gas and refining volumes.

The combined gains of improvement in margins and output in the refining business, steady petrochemicals outlook and higher gas volumes are seen driving RIL’s performance in the March 2010 quarter and 2010-11. On April 12, Standard & Poor’s (S&P’s) revised its outlook on RIL to stable from negative.

“We revised the outlook to reflect our expectation of an improvement in RIL’s financial metrics because we believe the consistent improvement in its operating performance over the past year is sustainable,” its analyst noted. While S&P’s expects RIL’s earnings before interest, depreciation, taxation and amortisation (EBIDTA) to have increased 20 per cent in 2009-10, it expects the company to further improve its operating performance by maintaining the existing level of gas production and a potential improvement in refining margins.

For the March 2010 quarter, analysts expect RIL’s net profit to rise by about 40 per cent to over Rs 5,400 crore. As per mean analysts estimates (on Bloomberg), RIL’s earnings per share (EPS) is seen rising 41.8 per cent year-on-year to Rs 72.9 in 2010-11. They have put a 12-month price target price of Rs 1,127.30 for RIL, which closed at Rs 1,083.30 on Friday. Among crucial events to watch for going forward are the outcome of the pending gas dispute with RNRL and NTPC, new discoveries in the E&P business and how RIL deploys its cash reserves.

Shri Mukesh Ambani – Words of Inspiration