New Delhi: NTPC Ltd, acting on legal advice from the top two law officers of the country, will present to Prime Minister Manmohan Singh details of the case it is fighting in the Bombay high court against Reliance Industries Ltd (RIL) over the supply of gas.
NTPC, the state-owned power generation company that is India’s largest power utility, will also take up the matter with the parliamentary committee on public undertakings (Copu) to safeguard its interests.
“NTPC will be meeting the Prime Minister as early as this week. It will also be taking its case to Copu where it will raise the issue as to why the international competitive bidding process was not honoured by RIL,” said a person associated with the development, but who did not want to be identified.
R.S. Sharma, chairman and managing director of NTPC, declined to comment.
Petroleum secretary R.S. Pandey declined to comment and power secretary Hari Shankar Brahma, whose ministry oversees NTPC, said he was unaware about the development.
NTPC had sought the legal opinion of attorney general Goolam Vahanvati and solicitor general Gopal Subramanium.
Subramanium, in his legal opinion dated 7 August, had criticized the government for jeopardizing NTPC’s case in the Bombay high court as reported by Mint on 14 August.
He had said: “It is also not clear whether the Central government has been informed about the ramifications of the suit filed by NTPC, the nature of the documents on record, and the unequivocal acceptance by the chairman and managing director (Mukesh Ambani)...”
“It is necessary that the querist (NTPC) must, without loss of time bring all these facts to the attention of the ministry of power as well as the chief executive of the executive government so that full facts are brought to the attention of the Central government and a careful decision must be taken in the matter,” Subramanium had added.
Samajwadi Party leader Amar Singh, a friend of Anil Ambani had earlier written a letter to Copu that a section of both the ministries of petroleum and natural gas, and power were trying to scuttle NTPC’s case. Mint had reported this on 1 September 2008.
Question of cost: NTPC says RIL promised supply of gas from the Krishna-Godavari basin at $2.34 per mBtu. RIL denies the claim.
In a separate case in the Supreme Court, the Mukesh Ambani controlled RIL is contesting the claims of Reliance Natural Resources Ltd (RNRL), controlled by Mukesh’s estranged brother Anil Ambani over the supply of 28 million standard cu. m a day (mscmd) of gas from RIL’s offshore block for 17 years at $2.34 (Rs114) per million British thermal unit (mBtu), 44% cheaper than the government fixed price of $4.20 per mBtu .
The three-year-old corporate battle has escalated to the Supreme Court, which is scheduled to hear arguments starting 1 September.
RIL amended its petition in the Bombay high court so as to include an earlier affidavit filed by the Union government in the same court, but in the case between RIL and RNRL (this is the same case that has now reached the Supreme Court). This affidavit, filed in June, had reiterated the decision of a group of ministers on the $4.2 per mBtu pricing and the policy for allocation of gas from the Krishna-Godavari basin. Subramanium also said that a private party (RIL) taking advantage of the government’s affidavit and using it as a primary defence could cause the government “great public embarrassment”.
The government has decided to form a four-member ministerial panel, comprising finance minister Pranab Mukherjee, law minister M. Veerappa Moily, power minister Sushil Kumar Shinde and petroleum minister Murli Deora, to come up with a unified stand.
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 mscmd of gas for the expansion of the state-owned power generator’s Kawas and Gandhar power plants, both in Gujarat, for 17 years at a price of $2.34 per mBtu. RIL claims there is no contract.
A spokesperson for the Reliance-Anil Dhirubhai Ambani Group, of which RNRL is a part, declined to comment. “As a law abiding and responsible corporate citizen, Reliance Industries refrains from commenting on issues which are subjudice,” said an external spokesperson for RIL.
Liz Mathew contributed to this story.