Govt gives NTPC ultimatum to sign gas pact with RIL

The government has given NTPC an ultimatum to decide on buying natural gas from Reliance Industries (RIL) by the weekend, failing which it (government) will cancel its allocation and give the fuel to other power producers. The Oil Ministry has conveyed to NTPC Chairman R S Sharma that the state-run firm has to decide this week on taking 2.67 million cubic metres of gas a day that was allocated to it from RIL's Bay of Bengal KG-D6 fields, a senior official said. "There is a long waiting list. Many plants need the fuel and NTPC cannot be sitting on the allocation," he said. Before the stern message to Sharma, the ministry had on May 12 written to the Power Ministry saying NTPC was not signing the gas purchase contract even though the state-run firm was the one that had vehemently fought to get the allocation. NTPC, he said, was delaying signing the Gas Sales and Purchase Agreement because it has sought legal opinion if such an act would compromise its court gas against RIL. Of the 17.99 mmcmd gas allocated to the power sector, a gas supply pact of only 2.67 mmcmd allocated to NTPC remained to be signed. NTPC's opposition had 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 this week. In case NTPC does not want to take the gas, it should state so officially so that the gas can be re-allocated to other fuel-deficit power plants, the official said. Initially RIL opposed selling the gas 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 country's largest gas field. RIL did not want to sell gas to NTPC as the state-run firm had cited the court case to not only 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.