Resources & rights

IN a judgment that stood by principle, the Supreme Court brought to an end the squabble between the two Ambani brothers, Mukesh and Anil, over gas pricing, which was triggered by the split. According to the demerger agreement between the two brothers signed in 2005, when they split the Reliance behemoth between themselves, the RIL had promised to supply RNRL 35 per cent of the production from the relevant fields or 28 million cubic metres of gas a day, at a price of $2.34 per million British thermal units. RIL's production-sharing contract with the government required that it pay the latter 10 per cent of the total revenue computed at a mutually agreed arm's-length price, until Reliance recovers 1.5 times its investment. Finally, RNRL has argued that the price of $4.33 per mBtu, which the RIL initially proposed to the government, was not an arm's-length price but an arbitrary one derived from a suspect process involving bids invited from a shortlisted set of power and fertilizer companies. One possibility could be that the two companies agree to approach the government to allow RIL to allocate 28 mcmd of gas to RNRL at $4.20 per mBtu.