NTPC seeks legal view on govt petition

NTPC seeks legal view on govt petition
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First Published: Tue, Jul 21 2009. 11 54 PM IST

Updated: Tue, Jul 21 2009. 11 54 PM IST
New Delhi: The gas dispute between Reliance Industries Ltd (RIL) and Reliance Natural Resources Ltd (RNRL) before the Supreme Court could become more complicated with state-owned power utility NTPC Ltd, which is fighting a similar case against RIL in the Bombay high court, seeking the attorney general’s opinion on the government’s petition in the case.
Depending on the attorney general’s feedback, the utility could consider intervening in the case between companies promoted by the estranged Ambani brothers.
The government had, in a petition filed before the Supreme Court on Saturday, made a case for scrapping the gas supply agreement between Mukesh Ambani, who controls RIL, and brother Anil Ambani, who heads RNRL. The terms of this agreement, including the price of $2.34 (Rs113.02) per million British thermal unit (mBtu), are similar to the terms of gas supply to NTPC’s Kawas and Gandhar plants in Gujarat by RIL being contested in the Mumbai court.
Analysts say the Supreme Court’s ruling in the RIL-RNRL case could have a bearing on the NTPC-RIL case, too. “We are studying the implications of the government’s petition. We have asked (for) the attorney general’s opinion on this,” said a top NTPC executive who did not want to be identified since the case is sub judice.
The government had made and then withdrawn a similar petition in the Bombay high court in the RIL-RNRL case that was then being heard in that court. The high court ruled in favour of RNRL in June.
Both RIL and RNRL have appealed the case in the Supreme Court—RNRL asking for immediate execution of its agreement with RIL, and RIL asking for the setting aside of the high court’s order because it claims this violates the government’s decision on who the gas should be supplied to and the price at which this supply is to be made, $4.2 per mBtu.
On Monday, the Supreme Court set 1 September as the date for the next hearing.
The government in its petition filed with the court on 18 July said: “Knowing fully well that gas does not belong to them and that the contracting companies are bound by the PSC (production sharing contract), the respondents (RIL and RNRL) have appropriated, through the MoU (memorandum of understanding), in a surreptitious and unauthorized manner, the entire gas, treating the same as their personal and family property.”
PSCs are signed between the government, which owns all natural resources in the country, and the operators of exploration blocks that are prospecting for oil or gas.
The MoU being referred to in the petition is one between the Ambanis, signed at the time they split the Reliance group’s assets between themselves, and which outlines the supply of 28 million standard cubic metres a day (mscmd) of gas from RIL’s D6 block in the Krishna-Godavari basin to RNRL’s Dadri power plant.
The case between NTPC and RIL in the high court dates to December 2005 and has to do with the terms of supply of 12 mscmd of gas for the expansion of NTPC’s Kawas and Gandhar plants for 17 years at a price of $2.34 per mBtu. The expansion efforts that this supply would have fuelled have since been put on hold.
NTPC has reason to be concerned by the government’s petition because its 12 mscmd supply is also mentioned in the same MoU. RIL had secured the bid to supply this gas to the utility in 2004 at $2.34 per mBtu and had beaten Petronas-Petronet, which had quoted $4.23 per mBtu. Shell and Yemen LNG were among the other losing bidders.
The NTPC executive mentioned in the first instance said the utility would take a “final view” on intervention in court after discussing the issue with the attorney general. “As and when NTPC takes a particular stand, we will take a call and respond to it in consultation with the law ministry,” said a person who is part of the government’s legal team in the case but did not want to be identified.
“If NTPC has a point of view, they must present it. Justice should be delivered after considering all points of view,” said a top official in the petroleum and natural gas ministry, who also did not want to be identified. An external spokesperson for RIL declined comment. A spokesperson for Reliance-Anil Dhirubhai Ambani Group, of which RNRL is a part, declined comment.
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First Published: Tue, Jul 21 2009. 11 54 PM IST
More Topics: NTPC | Government | RIL | RNRL | Supreme Court |