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| RIL cautions NTPC on commenting on sub-judice matters |
| Press Trust of India / New Delhi Sep 16, 2009, 16:10 IST |
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Reliance Industries (RIL) has cautioned that NTPC should not make comments on matters sub-judice lest they are construed as attempt to influence the outcome of its court case seeking natural gas at price committed in 2004.
Commenting on NTPC's filing to the stock exchanges last week, RIL President (Gas) R P Sharma wrote to Power Secretary H S Brahma saying "(NTPC's) statement purports to state that a contract came into existence between NTPC and RIL even before the court has heard the arguments and pronounced judgement."
NTPC's 2004 tender seeking supply of 12 mmscmd gas for expansion of its Kawas and Gandhar power plant, had clearly stated that the issue of Letter of Intent (LoI) to the lowest bidder was to be followed by signing of agreement within stipulated period for the contract to come in place.
RIL bid the lowest $2.34 per million British thermal unit (mmBtu).
"Pursuant to the (post LoI) discussions (on clauses in the Gas Sales and Purchase Agreement), RIL in December 2005 had sent to NTPC a signed GSPA in duplicate containing ceiling for liability and essentially the same terms (gas price of $2.34 per mmBtu) as bid by RIL ... With NTPC not signing the GSPA sent by RIL and instead filing a suit before the Bombay High Court, RIL withdrew the offer," he wrote.
RIL rubbished NTPC claims of savings to consumers on difference between the 2004 bid price and the Government approved rates of $4.2 per mmBtu saying the $2.34 per mmBtu gas price was for expansion projects at Kawas and Gandhar which do not exist today and the other rate was for existing plants.
"Therefore, what is relevant to compare is the difference in price of gas for the existing plants of NTPC ie (RIL's) KG-D6 gas price of $4.2 per mmBtu versus the price of alternate gas for these existing plants," Sharma wrote.
Against the delivered price of $6.5 per mmBtu of KG-D6 gas, NTPC has contracted RLNG (regassified-LNG) on a long term 'take-or-pay' basis of 10 years from January 2010 for its existing plants at an average delivered price of $11.2 per mmBtu on net calorific value basis.
"At an average difference of $4 per mmBtu between the delivered price of RLNG and KG-D6 gas, purchase of 9 million standard cubic meters per day (the shortfall NTPC faces at existing Kawas and Gandhar plants) will result in increase in cost by over Rs 1,900 crore per annum," he wrote.
Sharma cited the NTPC's average cost of power generation at Kawas and Gandhar for 2008-10 at Rs 6.34 per unit and Rs 6.64 per unit, respectively to say that the average fuel cost at these plants should be $16 and $11 per mmBtu.
"With these figures, it is obvious that if NTPC buys KG-D6 gas from RIL at the approved price of $4.2 per mmBtu, the cost of generating power would be just about Rs 3 per unit - implying a reduction of Rs 3.3 per unit and Rs 1.6 per unit for Kawas and Gandhar, respectively," he added.
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