New Delhi: The board of Ratnagiri Gas and Power Pvt. Ltd, or RGPPL, formerly known as the Dabhol Power Co., is divided on the issue of supply of gas from Reliance Industries Ltd, or RIL, which is engaged in a legal battle in the Bombay high court with power generator NTPC Ltd, one of the lead promoters of RGPPL.
While NTPC is not in the favour of RGPPL signing the Gas Sales and Purchase Agreement, or GSPA, at around $5.40 an mBtu (million British thermal units) including levies, GAIL (India) Ltd wants to go ahead with the deal.
NTPC and GAIL are the two main stakeholders in RGPPL, each with a 28.33% stake in the company. Other stakeholders include Maharashtra State Electricity Board, which owns 15%, and lender banks—IDBI, State Bank of India, ICICI Bank Ltd and Canara Bank Ltd having a 10.65%, 8.67%, 7.14% and 1.87% stake, respectively.
“This allocation has been made by the empowered group of ministers. If they (NTPC) oppose it, it will be very difficult to procure gas. We will ask NTPC to take the gas. It is a good opportunity as we will not be able to procure gas at this price,” said a senior GAIL executive who didn’t want to be identified.
RGPPL’s board will meet on Friday to decide on buying gas from RIL.
“RIL has send us a draft agreement which we are examining as we do not want our court case getting affected. Our interest has to be protected. We can’t compromise our ongoing case for Kawas and Gandhar projects,” said a senior NTPC executive who also did not want to be identified.
The GSPA, if concluded between RIL and RGPPL, will mean that the Mukesh Ambani-led firm will supply gas to RGPPL at well over twice the price of the contract between NTPC and RIL that is being disputed in the Mumbai court. The Bombay high court has temporarily allowed RIL to sell gas from its fields in the Krishna Godavari (KG) basin.
The case between state-owned NTPC and RIL has to do with the price at which the latter will supply gas from the KG basin to the former. NTPC claims the two firms agreed to a price of $2.34 an mBtu. RIL is also locked in another lawsuit with Reliance Natural Resources Ltd, or RNRL, owned by Mukesh Ambani’s estranged younger brother Anil Ambani. While the two firms want gas to be supplied at $2.34 per mBtu for 17 years and claim they have agreements with RIL for the same, RIL wants to sell at the $4.21 per mBtu price set by the government.
Subrat Ratho, managing director, Maharashtra State Electricity Board Holding Co. Ltd, who holds additional charge as principal secretary (energy), Maharashtra, didn’t respond to calls or to a message left on his cellphone for comment.
An RIL spokesperson said: “We have sent the final draft of GSPA to RGPPL on 23 February, but have been unable to sign the GSPA till date. The ministry has informed us that RGPPL may execute the GSPA next week.”
The decision to supply gas to RGPPL was taken after a December meeting of a so-called empowered group of ministers, a government body that is allowed to take key policy decisions and is usually tasked with deciding on controversial issues such as the supply of gas from RIL’s KG basin finds.