NTPC wants to pay marketing margins

NTPC Ltd, the country’s largest power generator, has sought permission from the Ministry of Power to allow it to pay the marketing margin on the natural gas it plans to buy from the Mukesh Ambani-controlled Reliance Industries Ltd (RIL).

“We have taken up the issue with the ministry. It will take time,” R S Sharma, chairman and managing director of the company, said. NTPC executives had a meeting with RIL representatives today to discuss the issue.

The government’s clearance to NTPC would mean that the power generator will have to shell out around 4 per cent more money to procure the gas from RIL.

NTPC was initially reluctant to pay this marketing margin of around 17 cents to RIL over and above the government dictated $4.2 a million British thermal unit (mBtu) rate.

The company has agreed to sign an agreement with RIL for supply of 2.67 mmscmd (million metric standard cubic metres a day) of gas at $4.2 for three projects other than Kawas and Gandhar in Gujarat. These projects are in Anta, Dadri and Faridabad.

The company has been allotted 2.67 mmscmd of gas from RIL’s KG-D6 block, a major portion of which is going to flow to the two power plants in Gujarat. NTPC was initially reluctant to sign the contract with RIL as it could compromise its stand in a separate case it is fighting in the Bombay High Court. The company had negotiated a contract with RIL in 2005 for supply of 12 mmscmd of gas to its Kawas and Gandhar plants in Gujarat at a rate of $2.34 per mBtu for 17 years. It soon ran into dispute over the terms and conditions of supply.