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Gas deal after all issues are resolved, says NTPC

Gas deal after all issues are resolved, says NTPC
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First Published: Sat, Jun 27 2009. 12 43 AM IST

Tough stand: NTPC unit at Shaktinagar, Uttar Pradesh. Harikrishna Katragadda / Mint
Tough stand: NTPC unit at Shaktinagar, Uttar Pradesh. Harikrishna Katragadda / Mint
Updated: Sat, Jun 27 2009. 12 43 AM IST
New Delhi: Mukesh Ambani-led Reliance Industries Ltd (RIL) has expressed its willingness to sign the gas sales purchase agreement (GSPA) with NTPC Ltd for 2.67 million standard cu. m of gas per day (mscmd) at the $4.2 (around Rs200) per million British thermal unit (mBtu) price set by the government for the utility’s projects other than Kawas and Gandhar. However, the state-owned utility said it would sign the agreement only if the other issues raised by it are resolved.
Tough stand: NTPC unit at Shaktinagar, Uttar Pradesh. Harikrishna Katragadda / Mint
NTPC has objected to take or pay clause in GSPA. It is also not willing to pay the marketing margin of $0.12 per mBtu to RIL.
NTPC and RIL are fighting a lawsuit in the Bombay high court over the price at which the latter will supply 12 mscmd of gas to the former’s Kawas and Gandhar facilities for 17 years. NTPC claims the two agreed to $2.34. RIL wants to sell at $4.20. “They have sent us a response to our letter dated 12 June, where we had raised certain critical issues such as take or pay clause and marketing margin of $0.12 per mBtu among others. They have agreed to supply gas for our projects other than Kawas and Gandhar,” said a top NTPC executive who did not want to be identified. “However, the letter is silent on the other critical issues raised by us. We are sending a response today asking them to come for discussions as per their convenience. We will only sign the GSPAs once the issues raised by us are resolved.”
A RIL spokesperson had not responded to questions emailed by Mint till the time of filing this story.
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 then stand-in finance minister Pranab Mukherjee, on 9 April.
RIL is also fighting a separate case with Anil Ambani’s Reliance Natural Resources Ltd (RNRL) in the Bombay high court. On 15 June, the court directed it to sign a “suitable arrangement” with RNRL for supplying 28mscmd for 17 years at $2.34 per mBtu—44% lower than the government specified price of $4.20 per mBtu.
utpal.b@livemint.com
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First Published: Sat, Jun 27 2009. 12 43 AM IST