NTPC lobbying govt to redirect gas to NCR units

NTPC lobbying govt to redirect gas to NCR units
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First Published: Sun, Sep 13 2009. 11 31 PM IST

Power issue: NTPC’s Gandhar plant in Gujarat. The major share of gas allocated by the empowered group of ministers for NTPC projects was reserved for the state-owned firm’s Kawas and Gandhar units.
Power issue: NTPC’s Gandhar plant in Gujarat. The major share of gas allocated by the empowered group of ministers for NTPC projects was reserved for the state-owned firm’s Kawas and Gandhar units.
Updated: Sun, Sep 13 2009. 11 31 PM IST
To avoid losing out on its allocation of natural gas, NTPC Ltd is lobbying the government to intervene and redirect gas reserved for two projects in Gujarat, which are caught up in its legal battle over price with Reliance Industries Ltd (RIL), to four units in the National Capital Region (NCR) centred on New Delhi.
Power issue: NTPC’s Gandhar plant in Gujarat. The major share of gas allocated by the empowered group of ministers for NTPC projects was reserved for the state-owned firm’s Kawas and Gandhar units.
If successful, the utility would be able to secure 2.06 million standard cu. m a day (mscmd) of gas, available in limited supplies and reserved for the Kawas and Gandhar projects, for the Anta, Faridabad, Auraiya and Dadri units sited in the NCR.
While the total gas allocated by the empowered group of ministers (eGoM) for NTPC projects was 2.67 mscmd, the major quantum was reserved for the Kawas and Gandhar projects, with the balance 0.61 mscmd, priced at $4.2 (around Rs204) per million metric British thermal unit (mmBtu), intended for NCR projects.
“We have already taken up the issue with the ministry of power. They will take up the issue to the eGoM so that we get the Kawas and Gandhar allocation for the NCR plants,” said a top NTPC executive who did not want to be identified due to the sensitive nature of the issue.
“We have no intention of leaving this gas,” this executive said. “Since the earlier allocation has been made by the eGoM, only it can decide on this re-allocation. Meanwhile, we will sign the GSPA (gas sale and purchase agreement) for the allocated gas for our NCR projects.”
The eGoM had decided on 9 April to allocate 18 mscmd of gas produced by RIL at its D6 block in the Krishna-Godavari basin in the Bay of Bengal to power generating firms, including NTPC. RIL has signed agreements with all domestic power project developers except NTPC.
India’s largest electricity generator was earlier reluctant to sign the agreement because it feared this would jeopardize its lawsuit against RIL in the Bombay high court, which it is fighting to buy gas from the producer at $2.34 per mmBtu.
As per the terms of a priority list in the government’s gas utilization policy, NTPC ran the risk of forfeiting its allotted gas if it did not ink the deal.
Union power secretary H.S. Brahma confirmed his ministry’s stand on the issue.
“The eGoM is yet to be formed. Whenever it is formed, we will take up this issue with them for getting this allocation. It is for the ministry of petroleum and natural gas to move the cabinet note for the formation of eGoM. We expect it to happen shortly,” Brahma said.
R.S. Sharma, NTPC chairman and managing director, declined to comment on the matter.
“Any such proposed move will impact state governments like Maharashtra and Gujarat which buy significant amount of power from Kawas and Gandhar. These states will have to continue buying comparatively expensive power generated, by using imported LNG (liquified natural gas), at Kawas and Gandhar,” said a spokesperson for RIL.
NTPC operates seven power plants fuelled by gas or liquid fuel with a total capacity of 3,955MW and runs a 1,480MW gas-based plant through a joint venture. It has a total gas requirement of 16 mscmd, but has to manage with a supply of around 11.5 mscmd.
The lawsuit between NTPC and RIL in the Bombay high court dates back to December 2005, with the point of contention being the existence and terms of a valid contract between the two.
NTPC claims there is one in which RIL promised to supply 12 mscmd for the expansion of the state-owned power generator’s Kawas and Gandhar power plants for 17 years at a price of $2.34 per mmBtu. RIL claims otherwise.
The utility filed an appeal in the Supreme Court on 5 September challenging a Bombay high court order allowing RIL to amend its petition so as to include an earlier affidavit filed by the Union government in the same court, but in a case between RIL and Reliance Natural Resources Ltd, promoted by Mukesh Ambani’s estranged younger brother Anil Ambani. This is the same litigation that has now moved to the Supreme Court.
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First Published: Sun, Sep 13 2009. 11 31 PM IST