Ambanis clash over gas prices

India's billionaire Ambani brothers are at loggerheads again – this time over a rich gas field – and the row has taken a political twist with the government intervening in the bitter dispute.

At stake is the price at which tycoon Mukesh Ambani's Reliance Industries Ltd (RIL) will sell gas from an offshore block in the vast Krishna-Godavari basin to a firm owned by his younger brother Anil Ambani.

The seeds of the latest battle between two of India's biggest corporate names lie in a deal carving up the Reliance empire after the 2002 death of their father Dhirubhai Ambani, who left no will.

In that family pact in 2005, Mukesh Ambani agreed to sell 28 million cubic metres of gas per day to his brother's company Reliance Natural Resources Ltd (RNRL) at $2.34 per million British thermal unit (mBtu) for 17 years.

Later, Mukesh's RIL, India's largest private firm, sought to change the sale price.

It cited a 2007 government order which said gas from the field, one of Asia's largest fossil fuel finds, cannot be sold below $4.20 per mBtu – much higher than the price set out in the brothers' pact. Anil, who wants a part of the gas for his group's power plants, won a ruling from the Bombay High Court saying the pact should be upheld.

But now the case is before the Supreme Court and the government, which controls fuel prices, has stepped in, insisting the supply agreement be cancelled.

The government has asked the court to annul the deal on grounds the siblings cannot set a price for the gas, a scarce resource in energy-hungry India.

"We cannot leave the industrial development of the country at their mercy and have contractors of gas fields decide on their own on the utilisation and price of gas," a government official said.

But in a court affidavit, Anil's firm accused the government of "blatantly and openly supporting" RIL's "unlawful design" to wriggle out of its commitment.

Anil appealed to Prime Minister Manmohan Singh to stop the oil ministry from "overtly and covertly" intervening in the row with his brother's firm, which he accuses of "corporate greed".

The federal government says it is only acting in the national interest, calling the "private agreement" a threat to the country's industrial development.

Mukesh's RIL has said the agreement between the brothers stipulated that "the supply of gas was subject to availability and approval by the government".

The Supreme Court has delayed a hearing on the dispute until September 1.

The row is the latest in a series of rancorous battles between the brothers. They went head-to-head last year over a blockbuster merger deal being negotiated by Anil with South African telecom giant MTN to create an emerging-market telecoms behemoth.

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