NTPC plans Kawas, Gandhar tenders

NTPC plans Kawas, Gandhar tenders

State-run NTPC Ltd, which is involved in an ongoing spat with Mukesh Ambani-controlled Reliance Industries Ltd (RIL) over the supply of gas from the latter’s D6 block in the Krishna-Godavari basin, has decided to call for tenders for power generation equipment for the expansion of its Gujarat projects.

“The notice inviting tender for 2,600MW having an estimated value of Rs9,100 core will be issued in August," said a senior NTPC executive, who did not want to be named. “The tender will be for 1,300MW expansion each at Kawas and Gandhar."

The Bombay high court case relates to gas supplies for the two projects. The next date for the hearing is 26 July.

“We’ve already had discussions about the same with our parent ministry. We’re going ahead with the tenders proactively," said another executive, who requested anonymity.

NTPC has asked the power ministry to lobby the petroleum ministry to protect its interests. It has been trying to secure interim gas supply pending a judgement in the ongoing dispute.

The lawsuit between NTPC and RIL dates back to December 2005, with the point of contention being the existence and terms of a valid contract between them. NTPC claims there is one in which RIL promised to supply 12 million standard cu. m a day of gas for the expansion of its Kawas and Gandhar plants in Gujarat for 17 years at $2.34 per million British thermal unit (mmBtu). RIL says there’s no contract.

The Supreme Court had decided in May that Reliance Natural Resources Ltd (RNRL), a Reliance Anil Dhirubhai Ambani Group firm, would not get access to gas from fields being developed by RIL at a discount. While RNRL was seeking the gas at the same price that NTPC wants, the utility’s executives say the case in the high court is different from the one RIL and RNRL fought in the apex court.

“Both NTPC and RNRL were asking for the same gas price. While the Supreme Court has already given a decision that RNRL can’t get gas at a discount, NTPC is still hopeful of getting gas at $2.34 per mmBtu," said Rupesh Sankhe, an equity research analyst at Angel Broking Ltd. “It also takes 15-20 months for power generation equipment to be delivered and this might be the reason why NTPC plans to go forward with the tender."

NTPC has a power generation capacity of 31,134MW, which it plans to ramp up to 50,000MW by 2012. It registered a net profit of Rs8,656.53 crore last fiscal on a turnover of Rs45,255 crore.