New Delhi/Mumbai: State-owned power utility NTPC Ltd has appealed against a request of Reliance Industries Ltd (RIL) at the Bombay high court to amend its plea in a litigation involving the sale of natural gas.
Mukesh Ambani-owned RIL wants to amend the plea to argue that following the government’s policy on pricing and allocation of gas from the Krishna-Godavari basin off India’s east coast, the RIL-NTPC contract stands “frustrated”.
“We have already appealed against any amendment to their plea. When a case is on for so long, why should someone amend their plea now?” asked an NTPC executive. The official declined to be named because the matter was in court.
Pending problem: NTPC’s plant in Kawas, Gujarat. The country’s largest power generator has an ongoing case with Reliance over the supply of 12mscmd of gas for 17 years at $2.34 per mBtu.
NTPC, India’s largest generator of electricity, and RIL, the country’s biggest company by market value, are fighting a lawsuit in the Bombay high court over the price at which the latter will supply 12 million standard cu. m a day (mscmd) of gas for 17 years.
NTPC claims the two companies agreed to a price of $2.34 per million British thermal units (mBtu). RIL wants to sell it at the $4.20 per mBtu price set by the government.
RIL is also fighting a separate case with Anil Ambani-owned Reliance Natural Resources Ltd (RNRL), in which the court has directed RIL to forge a suitable arrangement within a month to sell natural gas to RNRL at a price 44% lower than the government-stipulated price.
RIL wants to amend its petition to bring in a Central government’s earlier affidavit in the Bombay high court in its lawsuit with RNRL. The affidavit had stated the decision of a group of ministers on pricing and allocation of gas from the Krishna-Godavari basin.
The Bombay high court passed an interim order on 30 January, allowing gas to be sold to government-nominated buyers at $4.20 per mBtu. The court had then said the gas sale agreements should be entered into with the provision that they were subject to a final ruling.
While an RIL spokesperson declined comment, Milind Sathe, RIL’s counsel in both the lawsuits, told Mint that the original plea (in the NTPC lawsuit) was that there was no concluded contract between RIL and NTPC. “Now, we want to add to the plea that as long as the government policy stands, this contract is frustrated anyway,” Sathe said, explaining that RIL was only adding weight to its arguments.
In a 15 June note, domestic brokerage First Global Ltd, commenting on the RIL-RNRL ruling, had said the “greater concern is that the RIL-RNRL pricing formula may have set a precedent for the case that NTPC is fighting with RIL for the supply of gas to its Kawas and Gandhar plants in Gujarat. Here, too, RIL had backtracked on its commitment to supply 12mscmd to NTPC at a price of $2.34 per mBtu citing the ‘unlimited liability’ clause in its contract with the power company.”