radiaSRT/srt/60 Manoj Warrier Jun 16 2009 09 23 41.srt

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(Phone Ringing.)

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Manoj: <i>Haan</i> boss!
Nira: Manoj.
Manoj: Hmm!

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Nira: Manoj just explain the MOU. You are on speaker phone. Just explain the MOU.
Manoj: Hmm!

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Nira: The MOU had no price on it right?
Manoj: Yes.

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Nira: NTPC's price was determined by NTPC or NTPC... Explain the sequence of events.

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Manoj: The MOU says that the price of gas for the 28 MMSCMD. The terms of supply of gas for 28 MMSCMD should be more or less favourable than NTPC terms.

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Nira: Ok.
Manoj: Yeah?
Nira: Who determined the NTPC price?

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Manoj: The NTPC price was a global bid that was called for by NTPC, and we had proposed the price of 2.34.

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Nira: We had proposed the price of 2.34?

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Manoj: Yes. Post which there was a LOI that was issued to us confirming that they would like to appoint us as the supplier of gas.

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Manoj: When the LOI went into a formal agreement, the draft of the agreement had a clause.

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Nira: Uh huh! 
Manoj: Which said that we are liable for unlimited liabilities in case of non supply of gas.

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Nira: Uh huh!
Manoj: Therefore we said that we will not sign such an agreement because we can't be open to paying unlimited liabilities, you should have a cap on the liabilities.

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Nira: Right. So the price of...
Manoj: Then NTPC drags us to court saying that we are not honouring an agreement. We said we have not signed an agreement.

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Manoj: They said that an LOI is as good as an agreement, therefore you are liable to supply the gas at 2.34.

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Nira: Uhuh!
Manoj: That is what is being fought in the courts today.

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Manoj: However our claim has been, in the draft agreement which was sent by NTPC to us, there was a clause which said that subject to government approval.

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Manoj: Which is what we replicated in the RNRL DSPA also.

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Nira: That also said subject to government approval, right?
Manoj: Yeah, because the same agreement was replicated for RNRL.

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Nira: And the High court chief justice has ignored that, is it?

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Manoj: No, he has said that there is no clause in the production sharing contract with the government which restricts us from selling gas at a lower price than what the government approved price is.

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Nira: Is that true?
Manoj: That is what the judge's understanding of the case is.

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Manoj: See, the judge is just relying on the fact that when he asked Harish Salve, do you make profits at 2.34, Harish Salve said, I do make profits at 2.34.

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Nira: Hmm!
Manoj: See the point is at any price of the gas I make profit because these production sharing contract says that I first... I will have to recover all my investments...

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Nira: Yeah!
Manoj: Till then only 10% of the revenue goes to the government. Till I recover two and a half times my investments 28% goes to the government.

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Manoj: Post that 85% goes to the government. So at any price, I will still make profit over a period of time.

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Nira: Uh huh!
Manoj: Now the judge obviously has not understood this and has gone by the stated submission of Harish Salve saying that I make profit at 2.34. Even at one cent I may make profit.

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Nira: Uhuh! Right. Now tell me one thing Manoj, given that the NTPC outcome is still pending and given that it was subject to government approval.

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Manoj: Hmm!
Nira: What is the position as far as NTPC is concerned?

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Manoj: NTPC, we are still in court. The case that is being fought is for unlimited and limited liabilities.

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Nira: Uh huh!
Manoj: And we have now... And we actually want to now... You know we have taken a position which says that, you know, everything is subject to government approval.

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Manoj: So therefore NTPC also the price has to be 4.2 since it is subject to government approval.

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Nira: Uh huh!
Manoj: So that is where we are.

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Nira: No the PSC what you are saying...
Manoj: Hmm!

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Nira: In the case does it say... Where he says that it doesn't say you have to take government approval, does it say so?

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Manoj: The PSC actually has got three clauses. 21.6.1, 21.6.2, 21.6.3. 
Nira: Uh huh!

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Manoj: What was argued time and again is that, our version is that all three require government approval.

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Manoj: Their version is that we are allowed to... We have allowed the freedom of marketing gas and therefore what the government share is that will be valued at 4.2.

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Manoj: We are free to sell the gas at whatever the prices, that we agree to with our customers.

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Nira: That is their...
Manoj: Where as...That is their position. Our position is that there is no difference between value and price. Valuation and price.

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Manoj: All sale of gas has to be at 4.2. 
Nira: Right.

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Manoj: Hmm!
Nira: Did you manage to speak to Raja after that last night?

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Manoj: No, no. I mean I briefly spoke to him to confirm whether I can issue that statement or whether I need to take any further approval. He said, no, no. You issue the statement, that's it.

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Nira: The MOU that had been between Mukesh and Anil.
Manoj: Hmm!

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Nira: Did that have subject to government approval?
Manoj: It had on NTPC terms. It did not say... MOU... One minute.

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Nira: And it didn't say 2.34 either?
Manoj: No it didn't say 2.34 either.

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Nira: Is RIL and NTPC fighting on price?
Manoj: No their case is on unlimited and limited liability.

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Nira: Then RIL has accepted 2.34 right? 
Manoj: That is RIL's price only. It was a price that RIL submitted in a global bid.

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Nira: Uh huh! Had they officially retracted that price Manoj?

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Manoj: No they have not officially retracted that price. I don't think that they have officially retracted that price.
(Tape ends)