Talk it out, HC tells NTPC , RIL

Hearing on NTPC petition today

Suggesting that the two power biggies sort out their differences, the Bombay High Court today deferred till tomorrow the petition filed by National Thermal Power Corporation (NTPC) alleging breach of contract by Reliance Industries Ltd (RIL) for not signing the gas sales and purchase agreement (GSPA).

The hearing was adjourned till tomorrow by Justice SF Vajifdar as both sides sought time to argue the matter.

Hearing the arguments advanced by both sides, the judge said this is a very delicate matter and both parties should reach an amicable solution through communication.

The court even offered both parties some time to interact with each other and arrive at some conclusion.

Appearing for country's largest gas producer NTPC, Advocate General Ravi Kadam urged the court to restrain RIL from signing gas supply contract with any other party, as it would hurt the prospects of its upcoming 2,600 mw projects in Jawas and Gandhar in Gujarat.

RIL, however, disclosed to the court that its primary concern is the uncapped liability clause in the contract, which has resulted in making the project "unbankable" for RIL.

Besides, RIL counsel Aspi Chinoy also expressed concern over the increase in the gas prices at international level, which he said, had added to the woes of the company.

RIL had emerged winner of the bid to supply gas at $2.97 per million British thermal units (MBTU) to NTPC's upcoming projects in Gujarat for 17 years from 2007, for which it had signed the letter of intent in June 2004.

Countering NTPC's demand for "blocking RIL's gas stocks", RIL counsel said, "Besides the gas contract with the company, NTPC would also have the option to use gas generated by many upcoming gas projects in the country."

The dispute between the two power biggies has been on since the last month, over the issue of RIL not signing the GSPA.

NTPC has already taken up this issue with the power ministry. It wants the matter to be taken up with petroleum ministry. However, the petroleum ministry is learned to have expressed its inability to mediate in the matter.

NTPC had also accused RIL of "lack of seriousness" to ink the agreement, saying it was a matter of "grave concern" to the company as this would result in a shortfall for its targeted capacity-addition during the 10th Plan.