Reliance has a very long history of taking "panga" with the law and the government. I suppose many of you must have read the polyester prince to know about the history of reliance. The latest one has been with KG D6 gas output. First the Directorate General of Hydrocarbons (DGH) accused Reliance of not carrying out the work program of drilling adequate wells. According to the Field Development plan (FDP), the production from KG D6 should be 61 million standard cubic metres per day (mmscmd), but the current output is 49 mmscmd in the first week of April. Then there is a priority sector in the gas allocation to sectors like fertilizer units, plants extracting LPG from natural gas, power firms and city gas distributing companies selling CNG to automobiles.
Currently Reliance is producing enough gas to meet priority sector demands.
But it has entered into stringent ship-or-pay contracts with all its customers, wherein it has committed to transport the contracted quantity failing which it has to pay the pipeline transportation cost.
Since July, last year, Reliance had implemented pro-rata cuts all across the contracts. But the ministry directive is supply gas to the priority sector and leaving non-priority sector like steel and refineries without gas. But Reliance has denied that order, saying the government should indemnify the company against financial cost.
My question, can the company enter into a contract for the distribution of a natural resource over which the Government should have first say. My other question, as a business owner can you believe Reliance (which had another contract with RNRL to supply gas at cheaper prices and later retracted).
Your Views????
PS For Readers a link of polyester prince is given below.
Polyester Prince-The Real Story of Dhirubhai Ambani(Banned in India)
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