In what could turn out to be a blow to Reliance Industries Ltd. (RIL), the high-level gas panel headed by Union Finance Minister Pranab Mukherjee is understood to have decided that the Mukesh Ambani-owned RIL must supply gas to NTPC at $2.34 per million British thermal unit (mBtu) and make good the difference between the price it had offered to NTPC and the government approved price of $4.2 per mBtu out of its own pocket to take care of the government’s profit under the production sharing contract (PSC).
The gas panel is understood to have decided that an amended petition or interlocutory application would be filed before the Supreme Court stating that the $4.20 per mBtu price fixed for RIL’s KG-D6 gas was without prejudice to the state-run firm’s case seeking the fuel from RIL at $2.34 per mBtu price committed in 2004. The $4.20 per mBtu price would apply to all power plants of the state-firm barring Kawas and Gandhar expansion projects for which RIL had committed $2.34 per mBtu.
A Petroleum Ministry source said the interlocutory application would clarify that the NTPC’s case against RIL was different from the dispute between RIL and RNRL owned by Anil Ambani as its price was based on arms-length global bid. On the other hand, RNRL’s claim over KG-D6 gas was based on a private family agreement. NTPC’s claim for gas at $2.34 per mBtu was a rate RIL had committed in its tender of 2004 and this is likely to be incorporated in the application.
The application is also likely to state that if the NTPC’s claim is upheld in the courts then the government will force RIL to sell the gas at rates 44 per cent lower than its approved rate of $4.20 per mBtu. However, RIL will be made to pay royalty, profit petroleum and taxes at the $4.20 level. In taking these decisions, the gas panel has been influenced by the opinions given by the Attorney General and the Solicitor General.
“The issue concerning NTPC has been sorted out. The government is committed to protecting NTPC’s interest. There will be no more meetings of the gas panel as the Petroleum Ministry has already filed a Special Leave Petition in the apex court and if wants it can amend its petition. Now the ball is in the Supreme Court,” Law and Justice Minister Veerapan Moily said after the meeting. The meeting was also attended by Petroleum Minister Murli Deora and Power Minister Sushil Kumar Shinde along with senior officials of Petroleum and Power Ministries. “NTPC will file a separate SLP before the Supreme Court in the next 6 to 7 days,” Power Secretary H. S. Brahma told reporters on the sidelines of a function on power reforms organised by the Confederation of Indian Industry.
