(Phone Ringing.)
Manoj: Haan boss! Nira: Manoj. Manoj: Hmm!
Nira: Manoj just explain the MOU. You are on speaker phone. Just explain the MOU. Manoj: Hmm!
Nira: The MOU had no price on it right? Manoj: Yes.
Nira: NTPC's price was determined by NTPC or NTPC... Explain the sequence of events.
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.
Nira: Ok. Manoj: Yeah? Nira: Who determined the NTPC price?
Manoj: The NTPC price was a global bid that was called for by NTPC, and we had proposed the price of 2.34.
Nira: We had proposed the price of 2.34?
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.
Manoj: When the LOI went into a formal agreement, the draft of the agreement had a clause.
Nira: Uh huh! Manoj: Which said that we are liable for unlimited liabilities in case of non supply of gas.
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.
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.
Manoj: They said that an LOI is as good as an agreement, therefore you are liable to supply the gas at 2.34.
Nira: Uhuh! Manoj: That is what is being fought in the courts today.
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.
Manoj: Which is what we replicated in the RNRL DSPA also.
Nira: That also said subject to government approval, right? Manoj: Yeah, because the same agreement was replicated for RNRL.
Nira: And the High court chief justice has ignored that, is it?
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.
Nira: Is that true? Manoj: That is what the judge's understanding of the case is.
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.
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...
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.
Manoj: Post that 85% goes to the government. So at any price, I will still make profit over a period of time.
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.
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.
Manoj: Hmm! Nira: What is the position as far as NTPC is concerned?
Manoj: NTPC, we are still in court. The case that is being fought is for unlimited and limited liabilities.
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.
Manoj: So therefore NTPC also the price has to be 4.2 since it is subject to government approval.
Nira: Uh huh! Manoj: So that is where we are.
Nira: No the PSC what you are saying... Manoj: Hmm!
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?
Manoj: The PSC actually has got three clauses. 21.6.1, 21.6.2, 21.6.3. Nira: Uh huh!
Manoj: What was argued time and again is that, our version is that all three require government approval.
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.
Manoj: We are free to sell the gas at whatever the prices, that we agree to with our customers.
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.
Manoj: All sale of gas has to be at 4.2. Nira: Right.
Manoj: Hmm! Nira: Did you manage to speak to Raja after that last night?
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.
Nira: The MOU that had been between Mukesh and Anil. Manoj: Hmm!
Nira: Did that have subject to government approval? Manoj: It had on NTPC terms. It did not say... MOU... One minute.
Nira: And it didn't say 2.34 either? Manoj: No it didn't say 2.34 either.
Nira: Is RIL and NTPC fighting on price? Manoj: No their case is on unlimited and limited liability.
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.
Nira: Uh huh! Had they officially retracted that price Manoj?
Manoj: No they have not officially retracted that price. I don't think that they have officially retracted that price. (Tape ends)