RIL Dispute | NTPC wants cheap gas even as case is on

RIL Dispute | NTPC wants cheap gas even as case is on
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First Published: Fri, Jul 10 2009. 12 49 AM IST

Gas tussle: NTPC’s plant in Kawas. The power utility wants gas from KG-D6 for 17 years at a price of $2.34 per mBtu.
Gas tussle: NTPC’s plant in Kawas. The power utility wants gas from KG-D6 for 17 years at a price of $2.34 per mBtu.
Updated: Fri, Jul 10 2009. 12 49 AM IST
New Delhi: The power ministry’s efforts to resolve the NTPC Ltd-Reliance Industries Ltd (RIL) dispute to the advantage of the former continue, with the latest suggestion from it being a temporary supply of gas from the Mukesh Ambani-controlled RIL to the state-owned power utility till a judgement is passed in the case between the two.
Gas tussle: NTPC’s plant in Kawas. The power utility wants gas from KG-D6 for 17 years at a price of $2.34 per mBtu.
The proposal comes even as the ministry of petroleum and natural gas is examining another suggestion from the power ministry asking it to redistribute inexpensive gas currently given to NTPC’s Anta, Auraiya, Dadri and Faridabad plants to the utility’s Kawas and Gandhar plants in Gujarat as reported by Mint on Thursday.
RIL and NTPC are fighting a case over the terms of gas supply—to fuel the expansion of the two Gujarat plants—for 17 years at a price of $2.34 (Rs114) per million British thermal unit (mBtu).
A top official at the petroleum ministry, who did not want to be identified, said he was unaware of the new suggestion and would have to check if one such had been made.
The power ministry has been lobbying the Union government to intervene in its dispute with RIL over the supply of 12 mscmd (million standard cu. m per day) of gas from RIL’s block (D6) in the Krishna-Godavari (KG) basin off the east coast of India.
The case between NTPC and RIL in the Bombay high court dates back to December 2005. The expansion at the Kawas and Gandhar plants that the disputed gas would have fuelled have since been put on hold and the high court has temporarily allowed RIL to sell gas from its KG basin finds.
“We are trying our best to secure 12 mscmd at $2.34 per mBtu so that the expansion of 2,600MW can go on. We hope to see some light at the end of this tunnel. We are insisting that gas be supplied, so that the expansion can go on. We have asked the petroleum ministry for the same,” said a top power ministry official, who did not want to be identified.
In a recent note to the power ministry that has been reviewed by Mint, NTPC has exhaustively referred to the Bombay high court judgement of 15 June in the court case between RIL and Reliance Natural Resources Ltd (RNRL), headed by Mukesh Ambani’s estranged younger brother Anil Ambani—also over KG-D6 gas—and said, “The price of $2.34 per mBtu has been upheld on the basis that the terms of RIL contracts would be the terms of the NTPC contract.”
“We want supply at $2.34 per mBtu as this price has been upheld by the Bombay high court between RIL and RNRL. Let the supply be started and whatever be the court decision, we will go by that. The power generation capacity addition should not suffer,” said a top NTPC executive on condition of anonymity.
“NTPC would pay for the gas allocated at the rate upheld by the Bombay high court without prejudice to NTPC-RIL case, This will cause no prejudice to RIL as interim price of $2.34 is the price quoted by RIL to NTPC and is also the price upheld by the court,” he added.
Spokespersons for RIL and Reliance-Anil Dhirubhai Ambani Group (R-Adag), of which RNRL is a part, didn’t respond to queries mailed on Thursday at the time of filing this story.
The Bombay high court had directed RIL to arrive at a “suitable arrangement” within a month to sell natural gas at $2.34 per mBtu to RNRL. RIL and RNRL have appealed the order in the Supreme Court.
RNRL, which claims it has an agreement with RIL for the supply of 28 mscmd of gas for 17 years at a price of $2.34 per mBtu, wants the court to direct RIL to honour this agreement immediately. RIL is contesting the claim on the basis that it cannot supply gas at a price other than the one set by the government, of $4.20 per mBtu, and to buyers other than those prescribed in the government’s policy on gas utilization. The petroleum ministry has always maintained that RIL is only the operator of the KG-D6 field and that the price of the gas from this field will be that set by the government, which owns the natural resource.
utpal.b@livemint.com
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First Published: Fri, Jul 10 2009. 12 49 AM IST
More Topics: RIL | Reliance | NTPC | Mukesh Ambani | Gas dispute |