NTPC reluctance to buy RIL gas angers Petroleum Ministry

NTPC Ltd's reluctance to buy natural gas from Reliance Industries has angered the Petroleum Ministry, which wants to reallocate the gas earmarked for the public sector firm among other fuel-deficit power producers.      

The Ministry on May 12 wrote to the Power Ministry that NTPC had been allocated 2.67 million cubic metres of gas per day from RIL's KG-D6 fields at the instance of the state-run firm, which said that it needed the fuel desperately to meet the deficit at its plants.      

But, NTPC has not come forward to sign the Gas Sales and Purchase Agreement (GPSA) and has not even communicated its intent to do so in future despite RIL sending it the draft agreement, a senior Government official said.      

Of the 17.99 mmcmd gas allocated to the power sector, gas supply pacts of only 2.67 mmcmd allocated to NTPC remained to be signed. NTPC's opposition has also delayed the GSPA for a separate 2.7 mmcmd allocated to the Dabhol power plant and the same is now slated to be signed next week.      

In case NTPC does not want to take the gas, it should state that officially so that the gas can be re-allocated to other fuel-deficit power plants, he said.      

Initially RIL opposed selling to NTPC due to an ongoing court case but the state-run firm vehemently challenged it saying its legal battle with the Mukesh Ambani-run company was for future projects and its current plants were entitled to get gas from the nation's largest gas field.

Except NTPC and Ratnagiri Gas and Power, which runs the Dabhol plant, RIL has signed contracts with all the buyers of the 17.99 mmcmd of gas from KG-D6 that the Empowered Group of Minister has earmarked for the power sector.      

The EGoM in its meeting on April 9 confirmed the allocation of 2.67 mmcmd to NTPC's existing power plants.      

In February, RIL had opposed supplying gas to the state-run firm, which cited the court case not only to refuse participation in the process of discovering the price of KG-D6 gas but also blocked moves to sell the fuel to the Dabhol plant.      

RIL had in 2007 offered gas from its KG-D6 fields to RGPPL but NTPC, which is half owner of the country's largest gas-fired unit, blocked the move even though this gas is 25 per cent cheaper than imported-LNG being used at the plant.      

The Government has now decided that KG-D6 gas, priced at a cap of USD 4.20 per million British thermal units, will go to meet half the fuel deficits at existing power plants.      

RIL had in June 2004 won an NTPC tender to supply gas to its planned Kawas and Gandhar expansion projects in Gujarat but the two firms did not sign the GSPA due to disputes over issues such as liability in the case of default.      

NTPC filed a case against RIL at the Bombay High Court in December 2005, claiming that there is a concluded contract in existence for the supply of gas by the Mukesh Ambani-led firm to its power plants. According to RIL, the matter remained at the stage of negotiations.