The Ambani sibling rivalry resurfaced with Reliance Anil Dhirubhai Ambani Group Chairman Anil Ambani saying the government stands to lose Rs 40,000 crore owing to the escalating oil & gas exploration and production costs projected by Reliance Industries [Get Quote], controlled by elder brother Mukesh.

The two brothers had split their father's oil-to-communications empire, one of India's largest business groups, under a family agreement in 2006.

Speaking at the Reliance Natural Resources [Get Quote] AGM, Anil Ambani said the government may not get Rs 1,000 crore in the first five years from K-G basin gas owing to the dramatic increase in capex projections, while RIL stands to gain over Rs 20,000 crore.

The junior Ambani's statement comes days after Mukesh told media persons that RIL expects a quarter of profit to come from the hydrocarbon business from 2009-10.

A dispute between the Ambani brothers over the allotment of gas from the RIL-controlled Krishna-Godavari basin to RNRL is pending before the Bombay High Court. Under the family demerger, RIL was committed to supply 28 million standard cubic metres per day of gas to RNRL for power and other projects, at $2.34 per million British thermal unit for 17 years.

RNRL has challenged RIL for not meeting this commitment. The next hearing is due September 29.

Anil Ambani said RNRL has been unable to start its gas power plants because of the lack of a bankable gas supply agreement.

The younger Ambani has also objected to the government allowing RIL to sell gas to other buyers at $4.21 per mmBtu.

"The higher price of gas will lead to higher cost of power and fertiliser. This cost will have to be borne by millions of honest taxpayers, poor farmers, harried power consumers and a cash-strapped exchequer," he added.

He added that the ministry of petroleum and natural gas, which has been a spectator for two years in the RIL-RNRL gas dispute, joined the case recently to help RIL.

"It does cause considerable surprise when a ministry intervenes in the court to help a private player but scrupulously keeps away when it comes to protecting the rights of a navratna company, National Thermal Power [Get Quote] Corporation," Ambani said.

NTPC is one of the companies to which RIL has committed to sell gas at the higher price.

Officials in the petroleum ministry said if RIL sells gas at $4.2 per million British thermal unit as opposed to $2.34 per mBtu, RIL will recover its investment of over $11 billion.

"If they sell at higher prices, they recover their costs quicker and thus the government's share of the profits starts kicking in earlier," the official said.

Under the production-sharing contract, RIL can recover its entire investment in the block before it starts sharing profits from the sale of K-G basin gas with the government.