Reliance fights ONGC over Rs35cr unpaid bill

Vol 20, PW 17 (18 May 17) Midstream & Downstream
     

If you're tempted to pick a fight with Reliance - don't! This is a company that doesn't give up easily, even when it has a dubious case.

Cut to its 24-year battle with ONGC over the price of 50,0000 cm/d for its Naroda cloth mill in Ahmedabad under a five-year contract. PETROWATCH learns Reliance is planning an appeal to the Supreme Court after Justices MR Shah and BN Karia of the Gujarat High Court on May 4 ruled for ONGC and ordered Reliance to pay its old bill for gas.

With interest over the years, this has risen to around Rs35cr ($5.26m). Rewind to 1993 when ONGC filed a petition in the Vadodara Civil Court against Reliance demanding Rs9.97cr ($1.54m) of which Rs3.94cr ($610,000) had already accrued in interest.

But the story actually begins back on October 3, 1985 when Reliance signed the contract with ONGC covering the period from June 1, 1986 to May 31, 1991. Reliance originally agreed to pay Rs2878.87/1000 cubic metres ($44.54) including royalty but excluding sales tax and other levies.

Reliance later slashed the payment to Rs1400/1000 cubic metres ($21.66) in line with the domestic gas price fixed by the oil ministry on January 1, 1987. ONGC successfully argued to the high court that this price was not applicable to agreements already in force - and only applied to new agreements.