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NTPC opposes sale of RIL’s KG-D6 gas to Dabhol power plant

NTPC opposes sale of RIL’s KG-D6 gas to Dabhol power plant
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First Published: Thu, May 07 2009. 06 08 PM IST
Updated: Thu, May 07 2009. 06 08 PM IST
New Delhi: After vehemently seeking natural gas from Reliance Industries, state-run NTPC is now opposed to the fuel being sold to its joint venture Dabhol power plant.
NTPC, which vehemently opposed RIL’s plea for not selling its Bay of Bengal field gas to the state-run firm due to the ongoing court case, is now pointing at the same dispute in opposing sale of KG-D6 gas to Ratnagiri Gas and Power Pvt Ltd (RGPPL).
RGPPL board is split on sourcing gas from RIL, a company official said. “NTPC opposes the move while other promoter GAIL is in favour of it.”
The government has allocated 2.7 million cubic meters per day of gas from RIL’s KG-D6 fields to RGPPL for the period till September 2009 and 8.5 mmcmd thereafter, to help the nation’s largest gas-fired power plant reduce its reliance on imported fuel.
RGPPL was ready to sign the Gas Sales and Purchase Agreement contract to buy gas at $4.20 per million British thermal unit, 25% cheaper than the cost of imported fuel but NTPC objected to it and wanted the board to decide.
“The Board meets on 8 May to consider the GSPA,” he said.
NTPC too has been allocated 2.67 mmcmd gas from KG-D6 for its plants but it is not yet signing the GSPA and has sought legal opinion.
It had fought RIL’s opposition saying its legal battle with Mukesh Ambani company was for future projects and its current plants were entitled to get gas from the nation’s largest gas field.
Excepting NTPC and RGPPL, RIL has signed gas sale contracts with all of the buyers of 18 mmcmd gas from KG-D6 that the government has earmarked for power sector.
“NTPC had in 2007 blocked RIL proposal to meet the entire gas requirement of Dabhol citing the court case,” the official said.
RGPPL currently has a contract with Petronet LNG Ltd to buy 5.4 million cubic meters per day of imported LNG till September at $5.52 per mmBtu. The delivered price comes to $6.32 per mmBtu while that of KG-D6 gas would be $5.4.
The Mumbai-based firm had in February opposed sale of gas to NTPC as the government-owned firm had cited a case on Bombay High Court for not only refusing to participate in the process of discovering the price of KG-D6 gas but to block moves to sell the fuel to the Dabhol power plant.
The row between the two firms dates back of June 2004 when RIL had won a NTPC tender to supply gas to its Kawas and Gandhar units in Gujarat but the two firms did not sign the GSPA due to disputes over issues such as liability in the case of default.
NTPC filed a case against Reliance Industries at the Bombay High Court in December 2005, a good one and half years after the private firm refused to sign the GSPA.
The state-run firm claims that RIL’s acceptance of a Letter of Intent for supply was sufficient ground for the contract to be considered concluded.
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First Published: Thu, May 07 2009. 06 08 PM IST
More Topics: NTPC | RIL | GAIL | Dabhol Power Plant | KG-D6 gas |