NTPC reverses stand on Gujarat expansion

Will take gas at govt rate, despite HC suit with RIL.

Government-owned power generator NTPC Ltd today said it was willing to buy gas for its Kawas and Gandhar expansion projects in Gujarat at a rate prescribed by the Empowered Group of Ministers (EGoM). This reverses the company’s earlier stand on the matter.

NTPC had earlier refused to do so at the government rate of $4.2 per mBtu, fearing it could dilute its position in the case it is fighting in the Bombay high court with Reliance Industries.

“We have decided not to put a stop to our gas projects. We have approached the government to allocate gas to us at whichever price and quantity the EGoM decides on,” NTPC Chairman Arup Roy Choudhury said. “We will use this gas for Kawas and Gandhar expansion projects also.”

Adding: “We have taken the opinion of the Solicitor General, who has told us in writing that even if I use the gas in Kawas and Gandhar expansion, it is not going to weaken my case.”

He said the company had a strong case and price adjustments in the event of winning the suit could be done later.

During the previous EgoM meeting on July 28, the power ministry had proposed that 12 million standard cubic metres per day (mscmd) of gas be given to NTPC at the discovered international competitive bidding price of $2.34 per mBtu, without waiting for the outcome of the suit in the HC. Solicitor General Gopal Subramanium had then recommended the government company be given gas at a concessional rate under a provision of the production sharing contract (PSC).

The case between NTPC and RIL in the HC dates back to December 2005. It has to do with the terms of supply to the utility’s two Gujarat plants for 17 years at a price of $2.34 per mBtu. While the case was still in court, an EGoM in 2007 had fixed the price of $ 4.2 per mBtu for gas from RIL's KG-D6 fields until 2014.

NTPC has an overall installed power generation capacity of close to 32,000 Mw, of which 5,400 Mw is gas-based. The company currently requires 15 mscmd of gas. Choudhury said NTPC had requested the government to provide 22 mscmd of gas to fuel its planned 4,000 Mw addition to gas-based capacity. It has yet to be able to tie up any quantity for its 12th Plan gas-based projects.

Choudhury also said the company was in early stages of talks with Qatar to source an additional 1.3 mscmd of gas. “Talks are on with Qatar for sourcing the gas through the ministry and the high commission level. It would be premature to say anything.” The company’s plan is to expand its capacity base to 75,000 Mw by 2017.