NTPC-RIL spar over gas price

Power Secretary RV Shahi has written to MS Srinivasan, secretary for petroleum requesting him to ensure that the National Thermal Power Corporation's rights are not harmed in any manner while deciding on the sale price of gas from Reliance Industries to Reliance Natural Resources Ltd (RNRL).

Shahi's letter was written recently after the power major (NTPC) petitioned him to safeguard its interests with regard to Reliance Industries' gas supply contract for NTPC's Kawas and Gandhar power projects.

NTPC Chairman T Sankaralingam wrote to Shahi earlier this month that Reliance Industries had offered gas to RNRL at the same price quoted to it earlier. Recently, Reliance Industries sought the petroleum ministry's approval for its supply price to RNRL.

Shahi informed Srinivasan that the dispute was not due to the price of gas, but over matters such as capping of financial obligations in case of inadequate or no supply of gas. Reliance Industries had earlier wanted to cap its liability in case it failed to supply 12 million standard cubic metre a day of gas to NTPC over a period of 17 years.

Shahi also raised the issue that the gas price fixed earlier between NTPC and Reliance Industries was on the basis of international competitive bidding.

Reliance Industries had offered to deliver natural gas to NTPC at $3.18 per mmbtu exclusive of taxes, on net heat value basis. On gross heat value basis this would work out to $2.86 per mmbtu.

Reliance Industries had said that NTPC Ltd's suit filed in the Mumbai High Court regarding its failure to supply gas according to the time-schedule was motivated by other than purely commercial reasons.

The case between the two is being considered by the Mumbai High Court and even the Cabinet Secretary is exploring the possibility of an out-of-court settlement.