NEW DELHI: State-run power utility NTPC Ltd has ruled out paying more for natural gas it plans to buy from Reliance Industries’ Bay of Bengal gas field, saying there cannot be any out-of-court settlement and Reliance will have to supply gas at the price it quoted in the 2004 tender.
“No one at NTPC can do that (increase the price). There is no question of an out-of-court settlement as we think we have a very strong case and Reliance will have to honour price it quoted for our tender for sourcing gas,” NTPC chairman and managing director, T. Sankaralingam said.
In 2004, Reliance had won an international tender to supply 12 million standard cubic meters per day (3 million tons per annum) of natural gas to NTPC’s Kawas and Gandhar power plants in Gujarat at a delivered price of $2.97 (Rs 1,311 crore) per million British thermal unit (mBtu).
The company, however, did not honour the contract over some terms like liabiilty in case of default, forcing NTPC to move Mumbai High Court. Originally, Reliance was to begin supply of natural gas from its Krishna Godavari field this year but the delivery schedule was moved back by one year to mid-2008.
“They (Reliance) had accepted the Letter of Intent (LoI) we placed on them. Acceptance of LoI showed that they agreed with the terms of our tender. Now they cannot go back,” he said.
Sankaralingam denied reports of out of court settlement being worked out under terms that allowed increase of gas price to around $4.2-4.5 per mBtu and liability in case of default capped at certain percentage of yearly volumes. “No one has officially approached us for an out-of-court settlement,”he added.