Everybody wants to know how long D6 case will run

Vol 12, PW 7 (21 Aug 08) People & Policy
     

Gas consumers, stock analysts, the government, and just about anybody connected to the Indian hydrocarbon sector, is eagerly awaiting the Mumbai High Court’s verdict.

All want the answer to one question: when can Mukesh-controlled Reliance begin signing sales contracts for D6 gas The simple answer is: no one knows. In its original ruling in May last year, Justice AM Khanvilkar of the Mumbai High Court ordered Mukesh-controlled Reliance to set aside 40m cm/d gas: 28m cm/d for Anil-controlled RNRL, and 12m cm/d for state-owned NTPC.

Crucially, Khanvilkar forbid Mukesh-controlled Reliance from signing contracts for D6 gas until the case between the brothers is settled. Reliance objected, and is appealing the order (see above).

Analysts tell us Mumbai High Court Justices JN Patel and KK Tated have two options. “They could suspend the orders of the single judge (Khanvilkar) and also suspend the operation of their own order (when they make it) for a few days,â€‌ we hear.

“During this time RNRL could appeal to the Supreme Court.â€‌ Should this happen, Justice Khanvilkar’s order will remain in force but, crucially, Reliance still won’t be allowed to sign gas sales contracts until the Supreme Court rules.

Or, we hear, Justices Patel and Tated could suspend the lower court’s order but decline to suspend their own order until RNRL appeals to the Supreme Court. If that happens, Reliance could sign fresh contracts, but must still ensure 40m cm/d gas is set aside for RNRL and NTPC.

For Mukesh, this is the best option. At some point government lawyers - watching from the sidelines – are expected to argue that the national exchequer will suffer from loss of profit petroleum by delaying D6 gas sales contracts.

One thing is crystal clear. “Whoever loses this appeal will go to the Supreme Court.

There’s no doubt about that. The stakes are too high!â€‌ Can the Supreme Court rule before D6 flows to shore later this year No one, understandably, is willing to place a bet.