MUMBAI -- India's Reliance Industries Ltd. and Reliance Natural Resources Ltd. Friday signed a revised gas supply pact, a month after an apex court order settled a five-year dispute between two of the country's biggest corporate houses.
Reliance Natural will now ask the federal government to allocate natural gas in a step towards implementing the pact, it said in a regulatory filing.
The gas supply master agreement complies with the Gas Utilization Policy and EGOM (empowered group of ministers) decisions, Reliance Industries said in a statement.
India's highest court on May 7--while ruling on a dispute between the two companies on a gas supply agreement--asked them to start negotiations in eight weeks' time on a pact within the framework of government policy regarding price, quantity and tenure for the supply of gas.
The talks had to be completed within six weeks of their commencement.
The Supreme Court of India ruled that a private natural gas supply agreement between the billionaire Ambani brothers wasn't binding and that the two companies had to agree to a state-set price.
The ruling allowed the Mukesh Ambani-controlled Reliance Industries, India's largest company by value, to sell natural gas from the D6 block in the Krishna Godavari basin off India's eastern coast at $4.20 per million British thermal units--as set earlier by a federal government panel.
Anil Ambani's Reliance Natural wanted to pay $2.34, citing a family agreement signed in June 2005 when the brothers divided the petrochemicals-to-telecommunications empire of their late father, Dhirubhai Ambani.
According to the pact between Mukesh--the world's fourth-richest man--and younger brother Anil, Reliance Industries was to supply 28 million metric standard cubic meters a day of gas from the D6 block at $2.34 per mBtu to Reliance Natural for 17 years.
Shares of Reliance Natural jumped after the news, while Reliance Industries shares stayed neutral.
"It is positive for RNRL as this pact makes it certain that their power plants will receive gas. However, for Reliance Industries, it does not make any difference," said Saeed Jaffery, analyst at Ambit Capital.
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