Dabhol ready to source RIL gas, NTPC says no for other projects

Dabhol ready to source RIL gas, NTPC says no for other projects
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First Published: Fri, May 08 2009. 10 05 PM IST
Updated: Fri, May 08 2009. 10 05 PM IST
New Delhi: The board of Ratnagiri Gas and Power Pvt. Ltd (RGPPL) agreed on Friday to buy gas from Reliance Industries Ltd (RIL).
However, state-owned NTPC Ltd, one of the lead promoters of RGPPL that had initially opposed the plan, said it is unlikely to sign the gas sales and purchase agreement (GSPA) with RIL for its own projects.
“The RGPPL board has cleared the proposal. However, (RGPPL’s) GSPA with RIL will be signed only after (the company) inking the comprehensive service agreement with General Electric Co. (GE),” said a senior RGPPL executive, who didn’t want to be identified.
Mint had reported on 7 May about divisions within the board of RGPPL over sourcing gas from RIL. While NTPC was not in favour of RGPPL signing GSPA at around $5.40 (Rs266) per mBtu (million British thermal units), including levies, GAIL (India) Ltd wanted to go ahead with the deal.
RIL has signed GSPA with all domestic power project developers for the allocation of 18 million standard cu. m a day (mscmd) from its Krishna-Godavari (KG) basin gas finds, except NTPC and RGPPL.
Meanwhile, a senior GAIL executive said: “There are certain provisions such as take or pay, which we are discussing. Commercial terms (for RGPPL’s GSPA with RIL) are to be decided. Overall, there is no problem and NTPC is not opposed to this decision.” He, too, declined to be named.
NTPC and GAIL are the main stakeholders in RGPPL, each with a 28.33% stake.
However, NTPC is reluctant to sign GSPA for 2.67 mscmd with RIL for its own projects. “RGPPL’s board is not NTPC’s board. We are getting the GSPA for our own supplies legally vetted. We will first protect our case in the Bombay high court and only then sign the GSPA,” a senior NTPC executive said on condition of anonymity.
NTPC and RIL are engaged in a legal battle in the Bombay high court over the price at which gas will be supplied to fuel the expansion efforts at two NTPC plants—one each at Kawas and Gandhar. While NTPC wants gas to be supplied at $2.34 per mBtu for 17 years, RIL wants to sell at the $4.21 per mBtu price set by the government. While these expansion efforts have since been put on hold, the Bombay high court has temporarily allowed RIL to sell gas from its fields in the KG basin.
An RIL external spokesperson reiterated the company’s earlier stand: “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.”
The decision to allocate 18 mscmd of gas produced by RIL from its KG-D6 block to power generating firms, including NTPC, was done by a five-member empowered group of ministers, headed by stand-in finance minister Pranab Mukherjee, on 9 April.
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First Published: Fri, May 08 2009. 10 05 PM IST