RIL asks govt to re-allocate gas NTPC refusing to take

Turning the heat on NTPC, Reliance Industries (RIL) has asked the government to re-allocate the gas the state-run power utility is refusing to take, to other customers so that it is not forced to cap output from its eastern offshore fields.

NTPC, which has been allocated 2.67 million standard cubic meters per day (mmscmd) of gas from RIL’s KG-D6 fields, has after months of deterring signed contracts to take only one-fifth of its quota.

It has refused to sign contracts for 2.1 mmscmd gas allocated to its existing Kawas and Gandhar power plants in Gujarat on the grounds that it is located in legal dispute over supplies to expansion projects at these sites at price RIL committed in a 2004 tender.

"In view of the persistent stand of NTPC not to sign Gas Sales and Purchase Agreement (GSPA) for its Kawas and Gandhar plants, it is requested that the 2.1 mmscmd of gas allocated to the Kawas and Gandhar plants be reallocated to other customers," RIL President & CEO (Petroleum) and member on the company board PMS Prasad wrote to the Petroleum Secretary on October 7.

RIL had initially opposed selling gas to NTPC pending the case in Bombay High Court over supply of gas to the Kawas and Gandhar expansion projects at $2.34 per mmBtu.

The state-run firm, however, vehemently fought back for supplies saying while the court case was for expansion projects, the government allocated supplies were for existing plants.

When RIL relented and the government confirmed the allocation of 2.67 mmscmd at approved price of $4.20 per mmBtu, NTPC said it won’t sign the GSPA unless the Mukesh Ambani firm agrees to signing the pacts “without prejudice” to the ongoing court case.

“Despite RIL having agreed to sign the GSPAs with the caveat that these GSPAs would be ‘without prejudice’ to the ongoing matter that is sub judice, NTPC continues to maintain that it does not want to discuss the GSPA for the existing Kawas and Gandhar plants even though the ongoing litigation relates to the proposed expansion of Kawas and Gandhar,” Prasad wrote.

RIL is forced to keep output at just over 40 mmscmd of gas from KG-D6 fields despite having a capacity to produce nearly 65 mmscmd as customers like NTPC are not taking their allocated quantity and the government has failed to name new buyers beyond the initial volumes.

“Keeping in view the huge demand for gas in the country and also the fact that several customers are awaiting allocation of gas, it is only fair that the gas declined to be taken by NTPC for their Kawas and Gandhar plants be relocated to other customers,” the letter, copies of which were also marked to Power Secretary H S Brahma, said.

Though, GSPA with NTPC for supply of 0.61 mmscmd gas to their Anta, Dadri and Faridabad plants were executed on September 23, the state-run firm is yet to start drawing even these volumes.

“However, GSPAs for supply of gas to the Kawas and Gandhar plants could not be executed owing to NTPC’s position that this may affect the pending litigation between NTPC and RIL before the Bombay High Court,” Prasad wrote.