New Delhi: The petroleum ministry is not in favour of the power ministry’s strategy to help state-owned utility NTPC Ltd get inexpensive gas for two of its plants in Gujarat by tapping fuel supplied at a price that’s subsidized by the government.
Mint had reported on 9 July about the power ministry’s plans to ask the ministry of petroleum and natural gas, which oversees such matters, to redistribute inexpensive gas currently given to NTPC’s Anta, Auraiya, Dadri and Faridabad plants, to the two Gujarat plants—at Kawas and Gandhar—irrespective of which way the utility’s legal battle with Reliance Industries Ltd (RIL) over the supply of gas to the same plants goes.
The case between NTPC and RIL in the Bombay high court dates back to December 2005 and has to do with the terms of gas supply for the expansion of the utility’s two Gujarat plants for 17 years at a price of $2.34 (Rs114) per million British thermal unit (mBtu).
The reluctance of the ministry of petroleum and natural gas stems from the fact that the same gas—whose price is regulated by the government through the administered price mechanism (APM)—is utilized by its public sector unit GAIL (India) Ltd at a key petrochemical complex at Pata in Uttar Pradesh where it extracts methane and propane and supplies it as feedstock to oil marketing companies for making petrochemical products.
Inexpensive gas: The power ministry’s plan was to ensure that NTPC effectively gets gas for its Kawas and Gandhar plants at a rate slightly lower than the $2.34 per mBtu at which RIL had originally agreed. Harikrishna Katragadda / Mint
“The petroleum ministry says that the APM gas is rich gas and they do not want to divert it as it is used by GAIL at its petrochemical plant for methane and propane extraction. They are giving us a technical reason,” said a top NTPC executive who did not want to be identified.
A top GAIL executive who also did not want to be identified said: “We use the APM gas for extraction. The APM gas is already allocated. There is already a shortage at our petrochemical complex which we bridge through liquefied natural gas cargoes.”
A top petroleum ministry official declined to comment on his ministry’s opposition to the power ministry’s request but said, “We will discuss the issue with the power ministry.” The official didn’t want to be named. The price of this gas is currently at around $2.30 per mBtu. The power ministry’s plan was to ensure that NTPC effectively gets gas for its Kawas and Gandhar plants at a rate slightly lower than the $2.34 per mBtu at which RIL had originally agreed to supply gas to these plants.
It was also aimed at ensuring that NTPC gets to use the gas from RIL’s block (D6) in the Krishna-Godavari (KG) basin allotted to it without affecting its legal position in anyway.
The government had allotted gas from the KG D6 block to some NTPC plants, and the plants of a few other fertilizer and power companies. It has earmarked 2.67 mscmd (million standard cu. m per day) of gas from KG D6 to NTPC, of which 2.06 mscmd is to go to the utility’s two Gujarat plants. The plan was to make up the difference at Anta, Auraiya, Dadri and Faridabad using gas from off the east coast of India.
Mint had reported on 17 July about NTPC’s willingness to sign the gas sale purchase agreement with RIL for 2.67 mscmd at the government-mandated price of $4.20 per mBtu along with a marketing margin for projects other than Kawas and Gandhar.
However, the power ministry is still hopeful of pushing its plans.
Harishankar Brahma, Union power secretary, told Mint: “We want the APM gas for NTPC’s Kawas and Gandhar projects. We will again approach the petroleum ministry for the same. Let us see what happens.”