In a move that may help resolve the ongoing battle between Mukesh Ambani-owned Reliance Industries Limited (RIL) and Anil Ambani owned Reliance Natural Resources Limited (RNRL) the division bench of the Bombay High Court yesterday said that it could modify the injunction that prevents Reliance Industries from selling gas to third parties.

Earleir there was a stay on Reliance Industries for selling the gas of the KG basin to any party other than government owned entities.

Reliance Industries is fighting two court cases with regards to the use and pricing of the KG gas. The first case is with RNRL and other with NTPC.

The gas sale master agreement between RIL and RNRL states that RNRL is entitled to be supplied 28 million cubic metres of gas a day from the Krishna-Godvari (KG) basin at a price of $2.34 per million British thermal unit (mBtu) for a period of 17 years.

However, RIL has refused to supply gas at that price for that period.  RIL's counsel Harish Salve said that the company is ready to supply the gas to RNRL at government-approved price of $4.20 per mBtu.

In a parallel case RIL also has an agreement to sell gas to the government owned NTPC. While the government has stated that the gas be sold at $4.20 to third parties including RNRL, it want lower pricing for government owned entities such as NTPC and fertiliser companies.

Justice J N Patel has stated that the court could consider modifying the injunction after the government, under an affidavit, clarifies the price at which gas from the Krishna-Godavari block would be sold to government and its nominee companies like NTPC. This affidavit is to be filed by the government today.

The centre has also asked the high court to lift the stay on the sale of gas from the KG basin in the interest of the economy, especially for the benefit of power and fertiliser sectors.

The government-determined gas price may have a direct bearing on NTPC.

NTPC could be set for a Rs25,000 crore hit if it has to pay the government suggested price of $4.20 per mBtu. The RIL-RNRL gas sales agreement is based on the RIL-NTPC gas sales agreement.

The sale of KG-D6 gas would help eliminate power deficit in Andhra Pradesh, Maharasthra and Gujarat. It would also reduce fertiliser subsidy as KG-D6 gas would be priced at $ 4.20 per million British thermal unit, half the price of alternate feedstock like naphtha.

However, Reliance may not be able to sell the gas as the Mumbai High Court has restrained the company from selling the fuel to any company other than Anil Ambani-led Reliance Natural Resources Ltd and state-run NTPC Ltd.

The former by virtue of a family agreement and the state-run firm from an unsigned contract of 2005, claim 40 mmscmd gas from D6 and has taken Reliance to court to get their share.