Power minister Sushil Kumar Shinde has signalled a split in the power ministry’s efforts to secure interim gas supplies for NTPC Ltd from Reliance Industries Ltd (RIL) at $2.34 per million British thermal unit (mmBtu) pending a judgement in the ongoing legal dispute between the two companies in the Bombay high court over a gas supply contract.
Signalling split: Power minister Sushil Kumar Shinde. Ramesh Pathania / Mint
If the minister’s view prevails, then state-owned NTPC, which is controlled by the power ministry, will have to further delay its plans to expand power generation capacity by 2,600MW at its plants at Kawas and Gandhar.
Shinde told Mint that “such a step (securing temporary gas supplies) is not possible as the empowered group of ministers (eGoM) has already taken a decision on the gas price to be $4.2 per mmBtu. That continues. There cannot be a change. The court decision is awaited.”
The lawsuit between NTPC and RIL in the Bombay high court dates back to December 2005, with the point of contention being the existence and terms of a valid contract between the two. NTPC claims there is one in which RIL promised to supply 12 million standard cu. m a day (mscmd) of gas for the expansion of its Kawas and Gandhar power plants, both in Gujarat, for 17 years at a price of $2.34 per mmBtu. RIL claims there is no contract.
The minister’s comment comes at a time when NTPC has been lobbying, through the power ministry, with the petroleum ministry for supply of 12 mscmd of gas from RIL’s block (D6) in the Krishna-Godavari (KG) basin at $2.34 per mmBtu.
The power ministry had previously claimed that the petroleum ministry had agreed, at a meeting held late last year at the residence of solicitor general Gopal Subramanium, that it would put a proposal before the eGoM to ensure an interim supply of 12 mscmd of gas at $2.34 per mmBtu.
A senior power ministry official said, referring to that meeting, that its efforts to work out a deal through the petroleum ministry were in keeping with “legal advice given by the solicitor general (at the same meeting) .”
“However, since the minister is arguing thus (that the price cannot be changed), what can we do?” asked this official who did not want to be identified.
A senior NTPC executive who too did not want to be identified said: “Maybe the minister has not been fully appraised of the situation. We will try to convince him. We are acting in accordance with the legal advice given by the solicitor general.”
Still, Shinde’s statement does seem to reflect the opinion of the petroleum ministry.
“How can the gas be supplied at $2.34 price when everyone else is being charged a price of $4.2?” asked a senior official in the petroleum ministry who did not want to be identified.
Mint had reported on the efforts regarding the temporary supply of gas from RIL to the state-owned power utility till a judgement is passed in the case between the two on 10 July.
A spokesperson for the Mukesh Ambani-controlled RIL declined comment. “We cannot comment as this matter is sub-judice.”
Separately, RIL is also fighting a case against Reliance Natural Resources Ltd (RNRL), headed by Mukesh Ambani’s estranged younger brother Anil Ambani in the Supreme Court over the supply of gas from KG D6.
The court’s judgement is awaited.