The Central Government has directed Reliance Industries Ltd. (RIL) to sign gas sales and purchase agreement (GSPA) with NTPC and 10 other city gas distribution (CGD) companies to supply gas from the KG-D6 fields.

Recently, Communist Party of India (Marxist) Rajya Sabha member Tapan Sen had, in a letter to Prime Minister Manmohan Singh, pointed out to interventions and action of the Prime Minister's Office (PMO) to help private gas and power producers while ignoring the interests of its own PSUs. He had sought to know from the Prime Minister if these actions of PMO had his approval. The Power Ministry and the PSUs had been complaining that despite repeated directions from the government, RIL had failed to sign the GSPAs. Responding to these petitions, the government has shot off a missive to RIL directing it to sign GSPAs.

The letter has asked RIL to supply of 2.16 million metric standard cubic metres (mmscmd) a day to NTPC and smaller quantities to city gas projects in Hyderabad, Kakinada, Delhi, Indore, Ujjain, Agra, Kota, Meerut, Dewas and Sonepat.

The Empowered Group of Ministers (EGoM) on natural gas, headed by Finance Minister Pranab Mukherjee, had issued directions in this regard. While it had allocated 2.3 mmscmd of RIL's KG-D6 gas to NTPC, RIL had, in September, 2009, signed a GSPA with NTPC for supply of just 0.61 mmscmd due to capacity constraints in the pipeline carrying the gas.

The pipeline constraints had been removed since June, 2010, but RIL had been delaying the signing of a GSPA, officials in the Petroleum Ministry said.

Mr. Sen had pointed out that, on September 6, 2010, RIL represented to the Petroleum Ministry that they had an offer for purchase of gas at higher rate than that approved by the EGoM and they sought guidance as to how to proceed as per the production sharing contract. RIL was informed that EGoM had approved the above price for five years from the date of commencement of supply and RIL was instructed to comply with the price finalised by EGoM. “PMO's reported advice for seeking government legal opinion on mid-term price correction is in sharp contrast to its unsympathetic and ‘touch me not' attitude to government-owned enterprises,” Mr. Sen had pointed out in his letter.

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