With the Empowered Group of Ministers (EGoM) likely to meet in the second week of February to discuss issues related to the allocation of gas, the Power Ministry has decided to ask the EGoM to direct Mukesh Ambani-owned Reliance Industries (RIL) to start supplying gas to state-owned NTPC's Kawas and Gandhar expansion projects without waiting for a court decision on the gas issue between the two entities.
It may be recalled that RIL had, in response to an NTPC tender in 2004, quoted a price of $2.34 per million British thermal unit (mBtu) for supply of 12 million standard cubic metres per day (mscmd) to NTPC's Kawas and Gandhar expansion projects. However, a dispute over commercial terms, including RIL's liability in case of a default in supply, led NTPC to drag it to the Bombay High Court, where the matter is still pending.
It is learnt that Power Ministry has proposed to the EGoM that allocation of 9.7 mscmd of gas from the KG-D6 block of RIL should be made to the Kawas and Gandhar expansion projects to achieve a 70 per cent plant load factor (PLF).
However, the Ministry is not insisting on the $2.34 per mBtu price and is comfortable with the 2007 government-approved price of $4.20 per mBtu for KG-D6 gas. “NTPC has already started work on expansion of its Kawas and Gandhar power projects in Gujarat to meet the milestones necessary for getting gas allocation.
An equipment supply tender for the projects was floated in March, 2011,” the note stated.
The Power Ministry also wants the EGoM to order RIL to sign an agreement to supply 2.16 mscmd of gas to NTPC plants other than Kawas and Gandhar. RIL has not signed pacts for supply of 2.74 mscmd out of the 4.46 mscmd of gas allocated to five power projects by the EGoM. Of these, NTPC is the most-affected, with 2.16 mscmd of gas supply pending.
