Indian family gas feud resolved
By Erika Kinetz |
May 8, 2010, Saturday
|
Print Edition
Print Edition
INDIA'S highest court yesterday ruled in favor of billionaire Mukesh Ambani in a long-running feud with his younger brother over the price of natural gas from the country's largest known deposit, handing the tycoon a potential multibillion dollar windfall.
The case tested the government's control of India's natural resources against the sanctity of a private contract. The Supreme Court came down squarely in favor of the state in a decision that could set an important precedent and help end a five-year fight that has slowed oil and gas production in energy-hungry India.
The ruling means Mukesh's Reliance Industries will likely be able to sell gas to his brother Anil's Reliance Natural Resources, for double the rate set in a 2005 family agreement. Reliance Industries had sought to nullify the agreement because it hadn't been approved by the government.
"Today the Supreme Court has unambiguously ruled that the government is the absolute owner, the constitutional owner, the sovereign owner of gas," additional solicitor general Mohan Parasaran, who represented the government in the case, told reporters outside the courthouse in New Delhi. "It has got absolute rights to regulate the sale of gas."
The court gave the feuding brothers six weeks to renegotiate their contract.
Parasaran said that for the purposes of those negotiations, the price set by the family agreement is "no longer valid."
"They have to take into account the governmental price," he said.
That likely means a windfall for Mukesh, already the world's fourth-richest man. Reliance Industries has calculated that it could make US$11.5 billion from the gas if it's priced at the current government rate.
The case tested the government's control of India's natural resources against the sanctity of a private contract. The Supreme Court came down squarely in favor of the state in a decision that could set an important precedent and help end a five-year fight that has slowed oil and gas production in energy-hungry India.
The ruling means Mukesh's Reliance Industries will likely be able to sell gas to his brother Anil's Reliance Natural Resources, for double the rate set in a 2005 family agreement. Reliance Industries had sought to nullify the agreement because it hadn't been approved by the government.
"Today the Supreme Court has unambiguously ruled that the government is the absolute owner, the constitutional owner, the sovereign owner of gas," additional solicitor general Mohan Parasaran, who represented the government in the case, told reporters outside the courthouse in New Delhi. "It has got absolute rights to regulate the sale of gas."
The court gave the feuding brothers six weeks to renegotiate their contract.
Parasaran said that for the purposes of those negotiations, the price set by the family agreement is "no longer valid."
"They have to take into account the governmental price," he said.
That likely means a windfall for Mukesh, already the world's fourth-richest man. Reliance Industries has calculated that it could make US$11.5 billion from the gas if it's priced at the current government rate.
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