NTPC , India's largest thermal power operator, said it will stay away from the ongoing Reliance Industries (RIL) and Reliance Natural Resources (RNRL) case in the Bombay High Court over the supply of KG Basin gas.
Last Thursday, central government counsel T S Doabia said that NTPC does not have a 'concluded contract' with RIL.
NTPC and RIL are engaged in a separate legal battle since December 2005 over RIL's claim that it has only signed a Letter of Intent (LoI) with NTPC and does not have a concluded contract with the power company. NTPC, on its part, maintained that it has a concluded contract with RIL for the supply of natural gas to its Kawas and Gandhar power stations in Gujarat.
"The central government counsel has commented on a case whose merits he is unaware of. We will not be part of any matter that does not concern us," said a senior legal advisor to the state-owned NTPC.
NTPC had invited bids in October 2002 and RIL had emerged as the sole successful bidder for the supply of natural gas to these projects. RIL had won the right to supply 12 million metric standard cubic metres per day (mmscmd) of gas to NTPC's power projects in Gujarat at a price of $2.34 per million metric British thermal unit (mmbtu). RIL had quoted the lowest price in the bidding process in 2004 and was subsequently issued a LoI.
"We will take appropriate action to keep our right totally intact. We are not sitting on the case. This is a commercial contract and its sanctity has to be maintained," said R S Sharma, Chairman and Managing Director, NTPC, when asked about his company's response to the government lawyer's statement in the Bombay High Court. He refused to divulge further details.
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NTPC went to court in 2005 after RIL did not sign the gas sale and purchase agreement (GSPA) because of a dispute over a clause related to unlimited liability. RIL could not be reached for comments.
The RIL-RNRL gas sales agreement was drafted on the lines of the NTPC-RIL gas sales agreement. The verdict on the RIL-NTPC case is important as the gas agreement signed between RIL and RNRL, which is also being disputed in the High Court, enabled the Anil Ambani controlled RNRL to get 12 mmscmd of additional gas if the contract between RIL and NTPC fails. This would entitle RNRL to have 40 mmscmd of gas at a price of $2.34 per mmbtu.
NTPC's dispute with RIL has affected the former's investments because of non-availability of gas for the two power projects. "Investment plans for the project were not drawn. The project was awarded and the bid was also opened. But the work could not start. A lot of capacity could not be added...1450 mw in each plant," added Sharma.
The Bombay High Court has decided to hear the case on a fast-track basis. The next hearing is scheduled for Monday.