New Delhi, May 23 (IANS) In a seeming breakthrough, the respective Reliance groups led by brothers Mukesh and Anil Ambani Sunday said they have entered into a new non-compete pact that will help resolve the Krishna-Godavari gas dispute, hoping for an ‘environment of harmony’ in the future.
‘These developments would eliminate any room for any further disputes between the two groups on matters relating to the scope and interpretation of non-compete obligations,’ the Anil Reliance Dhirubhai Ambani group said in a statement.
‘All existing non-compete agreements between the two groups executed in January 2006 stand cancelled,’ the group said, adding the focus was now on an early negotiation of the gas purchase agreement as directed by the Supreme Court.
An identical statement was issued by the Mukesh Ambani-led Reliance Industries.
The boards of companies belonging to the two groups have also endorsed the new pact that allows the two groups to enter into any business or industry, other than gas-based power generation by Mukesh Ambani-led Reliance Industries for 12 years, the statements said.
The statement said the cancellation of existing non-compete pact will provide enhanced operational and financial flexibility to both groups and greater ability to participate in growth sectors such as oil, petrochemicals, telecom, power and financial services.
‘However, Reliance Industries Ltd has agreed not to enter the gas-based power generation business for the period upto March 31, 2022. An appropriate exception has been made in respect of its captive gas based power plants.’
Sunday’s development comes in the wake of a Supreme Court order May 7 that ordered re-negotiation of the agreement on the supply and pricing of natural gas from the Krishna-Godavari basin between Reliance Natural Resources and Reliance Industries.
The agreement between the two brothers concerned the price, quantity and tenure of gas supplies by Reliance Industries. It called for 28 million units of gas a day to be sold to Reliance Natural Resources at $2.34 per unit for 17 years.
After Sunday’s pact, the two groups said they were committed to fulfilling the vision of their legendary founder, Dhirubhai Ambani, and in contributing to the future growth of the Indian economy.
‘Reliance Industries and Reliance Anil Dhirubhai Ambani Group are hopeful and confident these steps will create an overall environment of harmony, cooperation and collaboration between the two groups, further enhancing overall shareholder value for shareholders of both groups.’
In its May 7 order, the three-member bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam had also asked the two groups to place the new gas purchase pact before the Company Bench of the Bombay High Court in six weeks.
The verdict also said the original agreement between the two brothers could serve as the ‘guiding tool’ in reaching the new gas supply and pricing pact, within the guidelines of the government.
The Krishna-Godavari gas fields, off the Andhra Pradesh coast, were won by the undivided Reliance Industries at the time when its founder, the legendary industrialist Dhirubhai Ambani, was still at the helm.
These fields have since turned out to be the biggest ever gas discovery made in India and one of the biggest in Asia in recent years.