May go to court over gas imbroglio: Fert Secy to Oil Secy

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

CNBC-TV18 learns that the Fertiliser Secretary has written to the Oil Secretary on the RIL-RNRL judgment. The fear stems from the fact that if this judgement takes precedence, what would happen to the gas supply for the fertilizer companies. CNBC-TV18's Nayantara Rai reports.

Here is a verbatim transcript of Nayantara Rai's comments on CNBC-TV18. Also watch the accompanying video.

As per the Gas Utilization Policy, the fertilizer industry has been allocated 15 million standard cubic metres per day (mmscmd) of gas. The secretary has pointed out that fertilizer companies are already drawing 90% of this and will shortly be ramping this up to 95%. A lot of fertilizer companies, which are shifting to natural gas from naphta fuel oil, are making large investments.

The Fertiliser Secretary wants the Oil Ministry to clarify whether the gas policy still holds, in light of the HC judgment.

"Our understanding is that any family settlement would not override the sovereign right of Government to formulate policies aimed at larger public interest. If the existing rights of fertilizer companies are altered to their disadvantage, I am afraid they may also seek available legal remedies independently," says the Fertiliser Secretary in the letter.

It must be remembered that the gas utilization policy - when it was formed - said it was without prejudice to the then ongoing court case. When RIL signed these agreements with the fertilizer industry, the power industry and even the steel sector, it has said the gas policy would be without prejudice to the judgment.

It remains to be seen if the power and steel companies follow suit and threaten to go to court over the issue.