Do your math first and do it well before you settle on pricing. When you come up with your price it is assumed that you have hedged your risks. And once you have signed a contract then do honour it. I have seen a lot many companies in Asia which falter on their calculations (spend very less time as well) and then spend an awful lot of resources at negotiating contracts time and again.
The case between RIL and NTPC/RNRL should not be entertained at the first place. I feel the verdict given by Bombay high court should be upheld by Supreme court as well. RIL is big enough to manipulate the petroleum ministry to get more bucks for the sale of its Natural gas from the KG basin. The petroleum ministry will indeed try to push for higher pricing which means higher revenue for them.
But, what happens to the downstream power sector which have made investments based on a gas pricing of $2.34/mmbtu? If they were to pay the RIL stipulated rates of $4.2/mmbtu, which RIL says is needed due to its excessive spending in drilling, the only way the power companies are going to recover the costs is by pricing the electricity more. This would indeed hurt the consumers.
When RIL bid for the KG blocks, it did based on its assumptions and risk. The gas pricing was based on the same set of assumptions and risks. If it won the bid based on its numbers then it needs to sell the gas proposed in the contract. If RIL had realized that indeed drilling for gas would cost more but then still bid low to get the allocation of gas blocks, then this would be FRAUD. Isnt the whole concept of encouraging private companies to participate was to push the risk/reward to them??
With its latest lobbying for higher pricing, RIL is manipulating the system and nullyfying the risks it has assumed. This clearly should not be allowed. This is the first allocation to private companies for gas drilling in India, and this should not set a bad precedence. However big RIL is and however close they are to Mr Deora, this should not be entertained. I hope the court gives the right verdict.