J. Venkatesan

’The government

is compromising

the interest of NTPC in the



NEW DELHI: The Centre on Wednesday asserted in the Supreme Court that the arrangement for supply and pricing of gas for public sector NTPC cannot be equated with any agreement between Reliance Industries Ltd. and Reliance Natural Resources Ltd. (RNRL).

Making its stand clear by way of an affidavit before a three-judge Bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam, the Centre said “the rights and obligation of NTPC and RIL cannot be regarded as similar in status to the private arrangement as in the case of RIL and RNRL because NTPC is not only a PSU but the process involved for price determination in the case of NTPC gas was by international competitive bidding.”

RNRL’s charge

Referring to the Centre’s stand, RNRL said in the present affidavit the government was compromising the interest of NTPC and was taking a partisan view. Senior counsel for RNRL, Mukul Rohatgi said that the affidavit did not speak anything about the price of gas at $2.34 a unit

He said Solicitor General Gopal Subramaniam had made a categorical statement that the gas would be supplied at $2.34 a unit to NTPC. However, the present affidavit did not say so, he said, adding that “this compromises the interest of NTPC.”

Mr. Subramaniam said “we will protect the interest of the NTPC. The decision will be taken when the need arises. We have nothing to do in the private dispute between the Ambani brothers. The production sharing contract (PSC) is not the subject matter of the government in the fight between the two brothers.”

Pricing issues

Mr. Rohatgi said RNRL had six objections in the January 12, 2006, Gas Supply Master Agreement (GSMA) which covered an uncertain tenure and pricing issues. He said “There is a limitation to the liability clause which favours RIL;the cost of production of gas was 90 cent and if it was sold to RNRL at the rate of $2.34, RIL will make huge profit; RIL’s demand to sell gas at $4.20 was against public interest as it will hurt the power and fertilizer sectors.”

Mr. Rohatgi said that the current expected production of 120 million standard cubic metres a day (mscmd) was only from two discoveries out of 19 discoveries made in only 336 sq. km. of the 7,000 sq. km. of KG-D6 field.

“RIL has 40 such fields aggregating 400,000 sq km. What RNRL is seeking is only 28mmscmd. RNRL is not concerned with the PSC and government policies.

“It is between RIL and Government. RNRL only wants a suitable gas supply agreement.”

He said “As per the Director General of Hydro Carbon the cost of gas from KG - D6 is $1.28 per mbtu and as per RIL’s own submission, it is $1.10 per mbtu. If gas is sold by RIL at $2.34, it is a case of lesser or reduction in profit and not a case of loss about Rs. 25,000-Rs. 30,000 crore as claimed by RIL. Further RIL would make a profit even at $2.34 and would make a huge profit at $4.20. For RIL, not supplying gas to NTPC is greed whereas not supplying gas to RNRL is more than greed.”

He argued that due to “obstacles created by RIL causing the delay in our Dadri project, RNRL proposes to supply gas to existing customers as directed by the government till its power plants come up.”

Arguments will continue on Thursday.