Not a page of much interest. Man Mohan dishes out one fresh scam almost once in a month. Today, we have the trampling of the Fundamental Right - the barbaric act at Ram Lila Grounds. Why read this stale old page ? Not edited even today -5th June, 2011

This page is about the MOU agreement between 2 estranged brothers for 'gas'. Their fight is not a matter of relevance to us. But the Government's subtle support to Reliance was. Unfortunately, no one has bothered till date

Reliance MOU to RNRL to sell gas, at 2.34 Dollars, the price at which it had agreed to supply gas to National Thermal Power Corporation / NTPC, was not arrived at 'arm's length'. True, it was not. NTPC got kicked out. So was RNRL. The agreement was at 'Kick's length'.

The joke does not end there. The Government was totally ignorant / indifferent to the price for over 2 years, though they now claim that Gas belongs to the people / Nation and they, as the Custodian, have the final say on Price [so long as it is in favour of Mukesh Ambani, as we cut through the convoluted excuses]. They / the Ministers and the Media dozed.  We sack a watchman if he keeps such a standard.

Study the details below and decide for yourself

[ Because of other work, I am not able to edit / update the KG scam related papers properly. Secondly, Reliance will win eventually with its money power and connections. No one has taken much interest in these pages. If there be any mistake, your e mail help to correct ]

 

Background / basic details

a]  Reliance cost of Production of Gas is only 1.28 Dollars / mbtu according to Directorate General of Hydrocarbons, a Government of India dept. The Government was paying only about 1.80 Dollars per mbtu to ONGC, till August 2009.

b] In 2003, NTPC [ National Thermal Power Corporation] floated an international tender for 17 years gas supply. Reliance bid the lowest - 2.34 Dollars mmbtu - and NTPC gave it a letter of intent in June 2004. RNRL also signed an agreement with Reliance, for supply of gas at the price quoted by Reliance to NTPC

Reliance has refused supply to both NTPC and RNRL, at the earlier negotiated / brokered prices.

c] The Bombay High Court has ruled that the family MOU does not violate the PSC / Production Sharing Contract between the Government and the undivided Reliance. The basic inference from the ruling is that, RIL - RNRL agreement, does not violate the PSC.  [ Business Standard, 7-8-2009 ]

The present Mukesh Ambani led Reliance has challenged this in the Supreme Court.

d] Solicitor General - G. Subramaniam - Business Standard, 4-9-09

" The fact that NTPC had to file a suit is a telling comment on the facts of the present case "

Courtesy - Prasad: 'when the economic value of the contract is protected and a reasonable supply is known, liabilities are important but they cannot make or break the contract'

So, Reliance contention that Liability was the only major outstanding point of contention with NTPC and that was eventually the cause for NTPC's action and Reliance's counter action, is disowned by the President of Reliance Gas, now elevated to Director as well

Reliance versus RNRL

Who is Anil Ambani [RNRL] ?

He was the No 2 person in Reliance before his estrangement with his elder brother. He has based his arguments with pertinent facts that can stand scrutiny. He has hit the bull's eye with precision like an Olympic Shooter

He is the most widely known, authentic and still undeterred, Whistle Blower. There was none, of his stature, in the last 50 years. Hope he gets the 'whistle Blower Bhushan' award, from the Public

Why ? Just think for a moment that there was no fight between the brothers. Not one single, major point in the unfolding scam, would have become known to the Public like now. He deserves applause. Now to the fight for gas

1] Timing of the Agreement: The agreement / Memorandum of Understanding / MOU was signed in 2006. The Price is the same as offered by Reliance to NTPC in 2003. So the Price Term seems to be overboard.

Many Companies transfer products internally, from one branch to another, either within the Country or outside of the Country. So even if for a minute one contends that it is all a family arrangement, with benami business entities, 'the Transfer Pricing mechanism / check ups / parameters should take care of such deals now and in future.

2] Judicial Scrutiny: The Bombay High Court must have heard the highlighted points, legal precedents / points of law and evidences / arguments presented from all sides. After all that, they have pronounced that the 'Family MOU does not violate the PSC'

3. As RNRL case is similar to NTPC, most other points are common for all and nothing more need to be said in specific

 

Bureaucratic Support / Negligence

"The DGH says that the Capital Expenditure has been verified by independent experts including the Comptroller and Auditor General (CAG) "  - Business Standard, Friday, 7-8-09

Reliance / Prasad's interview

.."We have had only one interaction with CAG -that was in April May this year" - 2009

.." So, even though it is outside the scope of PSC, we have said we welcome the CAG audit and the scope of it" ..

.." Now a new date is being discussed some time in the third or fourth week of September to sit with CAG and the Petroleum Ministry to agree on the methodology" 

NO CAG audit has been done so far. DGH lied to the Media

[ One cannot support any of Ambanis for long except on a specific issue and that too, on some points. They share the same lineage and were partners till they broke up. I have not read the volumes written against them by Mr. Gurumurthy and Arun Shoorie. Whatever little read, revolted me then ]

 

	Errors and Omissions exempted.  If there be any unwanted oversights, mistake in content or suggestions for improvements,  I will be thankful for your feedback
	Personal website of R. Ranganathan M.Sc., [ MBA - IIMA]    Main / original content: around 2009: last minor modification, June 5,  2011