New Delhi: A five-member empowered group of ministers (eGoM), headed by interim finance minister Pranab Mukherjee, on Thursday decided to allocate to power generating firms 18 million standard cu. m a day (mscmd) of gas produced by Reliance Industries Ltd (RIL) from its KG-D6 block.
The list of plants that will receive this gas includes some belonging to state-run NTPC Ltd. The two firms are engaged in a legal battle in the Bombay high court over the price at which gas will be supplied to fuel the expansion efforts at two NTPC plants—one each at Kawas and Gandhar.
Optimum use: Pranab Mukherjee, acting finance minister & eGoM head. Indranil Bhoumik / Mint
These expansion efforts have since been put on hold.
“Those who are ready to take gas will get gas. The ministry of petroleum and natural gas, in consultation with the ministry of power, will now decide on the individual allocations of the projects,” said a member of eGoM, who did not want to be named. He confirmed that NTPC’s projects would also be supplied RIL’s gas.
The price at which gas will be supplied to the power plants, including existing NTPC ones, will be $4.21 (Rs210 today) a million British thermal unit (mBtu), excluding levies.
Although the government arrived at this price for RIL’s Krishna-Godavari (KG) basin gas in 2007, a ministry of petroleum and natural gas statement issued in December 2008 had clearly stated: “Regarding the NTPC-RIL sale price, it has been decided that the verdict of the court should be awaited.”
The Mukesh Ambani-controlled RIL is locked in two lawsuits with NTPC and Reliance Natural Resources Ltd (RNRL), controlled by Mukesh Ambani’s estranged younger brother Anil Ambani. The two firms want gas to be supplied at $2.34 per mBtu for 17 years and claim they have agreements with RIL to this effect.
RIL wants to sell them gas at the price of $4.21 per mBtu set by the government. The Bombay high court has temporarily allowed RIL to sell gas from its fields in the KG basin.
The impact of the eGoM’s decision on these cases, if any, wasn’t immediately clear. A senior NTPC executive, who did not want to be identified, said: “When the allocation is done we will see. We have our own legal expertise. Even after the allocation, there will be a lot of issues that will come up, such as gas sales-purchase agreement. It will need further deliberations.”
The eGoM meeting, originally scheduled to be held on 23 March, was attended by home minister P. Chidambaram, petroleum and natural gas minister Murli Deora, power minister Sushil Kumar Shinde and law minister H.R. Bhardwaj.
Petroleum secretary R.S. Pandey and power secretary V.K. Sampath couldn’t be reached for comment. They did not respond to several calls made to their mobile phones.
“We are awaiting the communication on the decisions taken by the eGoM. Gas from KG basin will be sold at a price of $4.2 mBtu, as decided by the Government of India,” said a spokesperson for RIL.
At least two government officials, who did not want to be identified, said that the eGoM’s decision, taken a week before India goes to the polls, was to ensure that the gas, production of which started last week, is not wasted.
Thursday’s allocation of 18 mscmd has been made out of 40 mscmd of production from RIL’s gas find. Another 15 mscmd has already been allocated to fertilizer plants. According to the country’s gas utilization policy, fertilizer plants have the first priority, followed by LPG (liquefied petroleum gas) plants, power plants and city gas projects.
Mint had previously reported that RIL was close to signing a gas supply deal with Ratnagiri Gas and Power Pvt. Ltd for its power plant at Dabhol. This is one of the firms listed as a beneficiary by eGoM.
“There are a lot of power companies who need gas. There was a need for an eGoM meeting for which we needed the Election Commission’s permission,” Union minister for petroleum and natural gas Deora had earlier told Mint.
PTI contributed to this story.