Government accuses RIL of armtwisting over natural gas pricing norms

NEW DELHI: The Narendra Modi government has accused Reliance Industries of armtwisting it into implementing the January 2014 guidelines on natural gas pricing by slapping a notice declaring its intention to pursue international arbitration to break the deadlock on the issue.

In fresh submissions filed in the Supreme Court on Monday, the government suggested that the issue of gas pricing was not subject to international arbitration as it was an economic decision, which could not even be scrutinised by the domestic courts.

RIL's stand that it would withdraw the arbitration notice if norms were implemented meant the company was armtwisting the Centre in the "guise of arbitration", the government said through lawyer Farid F Karachiwala. "...a challenge of a policy applicable to the entire sector except those blocks/fields mentioned in the notification cannot be a subject matter of challenge before a private arbitral tribunal," it said.

Reliance Industries' KG-DWN 98/3 was one of the over 250 blocks allotted under the New Exploration & Licensing Policy (NELP) and hence could have been challenged only in Indian courts if at all, the government said.

The Mukesh Ambani-owned company is pursuing four arbitration cases against the government.

The Modi government claimed that the January 2014 gas pricing guidelines had never been given effect to and hence cannot be enforced through arbitration. It pointed out that the new government had, after taking over in May, found it wanting in many aspects and had revised it in its October 2014 norms, ensuring that the "burden on the public is minimal".

"The same (guidelines) cannot be framed on the basis of profit and returns to the contractor (RIL)," the government said in its submission.

It argued that it is the executive's prerogative to decide on this issue. "Manufacturers/producers need not be given opportunity as a matter of procedure before price fixation," it said. The government also contested as "procedurally faulty" the RIL move to invoke arbitration on May 9, 2014, much before a dispute had arisen as the January norms had fixed prices till March 2014.

The government demanded that two arbitrators should be Indian as the dispute was materially different from the one involving cost recoveries and essentially related to Indian law and policy.

RIL will respond to these submissions at the next hearing of the case.