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Once again central Government has shown its commitment to Reliance industries. The Union government on 13-01-2009 told the Mumbai high court that it would not let NTPC Ltd buy gas from a field operated by Reliance Industries Ltd (RIL), off the Krishna-Godavari basin on the country’s eastern coast, at less than $4.20, or Rs204 today, per mBtu (million British thermal unit)—a price approved by a group of ministers in September 2007.

NTPC is fighting in a separate lawsuit with RIL over an unlimited liability clause in its gas supply deal. It had invited global tenders for supply of 12mscmd of gas, which RIL had won at a price of $2.34 mBtu.NTPC’s lawyer objected to the government’s position, saying no order should be passed in the case as a parallel lawsuit is already under way. “This does not apply to us, and our counsel made it clear in the court by refuting it,” said a senior NTPC executive, who did not want to be named.

The clarification was made when the court was hearing arguments on a lawsuit between Mukesh Ambani-led RIL and Reliance Natural Resources Ltd, led by his estranged brother Anil Ambani, on sharing and pricing of natural gas from RIL’s offshore field.

Based on that lawsuit, RNRL has been claiming a lower price for itself. However, the government’s stand on 13-01-2009 on price could likely dent those claims.

Arguing in favour of lifting a stay on the sale of gas by RIL, additional solicitor general Mohan Parasaran said: “NTPC will not be allowed to buy gas at less than $4.2 per mBtu.”

RNRL has claimed 28 million standard cubic metres a day (mscmd) of gas at $2.34 per mBtu—40% lower than the government’s price—for 17 years. RIL, which said in an affidavit on 13-01-2009 that gas production is likely to start on 15 February, is contesting that claim.