The judgment asserts gas is a national asset that is owned by the government, not the company that operates the field, until it is delivered to customers.
While the decision, in favour of Mukesh Ambani's Reliance Industries over younger brother Anil's Reliance Natural Resources, brings clarity, it may deter investment from foreign firms which want complete freedom to market Indian gas.
Some questions got answers from Supreme Court ruling -
- WHAT IS THE IMPACT OF THE RULING ON ENERGY POLICY?
- WILL NEW DELHI CONTROL PRICING OF CRUDE OIL?
- WHAT DOES THE VERDICT MEAN FOR INVESTMENT IN EXPLORATION?
- DOES THE VERDICT POINT TO UNIFORM PRICING OF GAS IN INDIA?
Of the 35,000 Mw of power plants it is working on, around 10,000 Mw were to be based on the 28 mmscmd that Mukesh Ambani’s Reliance Industries Limited (RIL) was supposed to supply it each year as per the MoU that Anil and Mukesh signed when the Dhirubhai empire was split. Given that the gas will no longer be available at $2.34 per mmBtu and will have to be bought at $4.2 per mmBtu, ADAG’s profitability will take a big hit. http://www.business-standard.com/india/news/sunil-jain-two-cheers-for-anil/394259/
The Supreme Court should have effected a full closure to the controversy, than directing renegotiation, even with conditions, as the parties have to report to the Company Court, there is scope for a second round of litigation. http://www.business-standard.com/india/news/sc-should-have-effected-closure-to-ambanis/-case/394272/
Though RIL is seen a clear winner in the battle, it may not just be over yet. The brothers have been asked to renegotiate the price of the contract and more twists and turns may still happen in this story.