In a turnaround of sorts giving a new twist to the ongoing battle over the KG basin gas, the Petroleum and Natural Gas Ministry on Wednesday decided to support the state-run NTPC in its legal battle against Mukesh Ambani-owned Reliance Industries Limited (RIL) for fulfilling the commitment to supply natural gas at the 2004 price for its Kawas and Gandhar (Gujarat) power plants.
The Petroleum Ministry’s stand was conveyed to the Power Secretary, H. S. Brahma, by the Petroleum Secretary, R. S. Pandey, during the first formal meeting on the gas issue here. NTPC Chairman and Managing Director, R. S. Sharma, was also present at the meeting. NTPC has taken RIL to court for its failure to fulfil the agreement for supply of 12 mscmd gas for its Kawas and Gandhar projects at $2.34 per mBtu, a price quoted by RIL in a 2004 tender.
Sources in the Petroleum Ministry said that NTPC was even contemplating seeking damages from RIL for not keeping its commitment. It is likely to press for seeking the price difference between the government-approved price of $4.2 per mBtu and the one committed in the tender from RIL.
The change in Petroleum Ministry’s stand and the meeting between the two secretaries came days after the NTPC sought legal opinion on the issue from the Attorney General as well as the Solicitor General who had felt that RIL could not be allowed to wriggle out of a commitment made through a global bid and the power PSU should move the Supreme Court.
However, while extending support to NTPC’s case against RIL, the Ministry is learnt to have opposed Anil Ambani-owned Reliance Natural Resources Limited’s (RNRL) claim over KG-D6 gas at a similar price on the grounds that a private family MoU could not impinge on government’s right to approve price and fix usage of gas. The Ministry is of the view that NTPC’s interests will be protected by all means. It feels that RIL had violated the production sharing contract (PSC) for KG-D6 by not seeking approval of the government before committing a price to NTPC.
Even the Empowered Group of Ministers headed by Pranab Mukherjee, which had fixed the $4.2 per mBtu price for KG-D6 gas, had stated that its decision was without prejudice to the outcome of NTPC versus RIL case. It had decided in 2008 that the verdict of the court case should be awaited.
On the other hand, Union Power Minister Sushil Kumar Shinde also stated that NTPC had not yet decided on filing a petition in the Supreme Court over its dispute with RIL.
