RIL-NTPC: PowerMin passes the buck on margin issue

The Union power ministry has said the concept of ‘marketing margin’ does not apply in the gas sale from Mukesh-Ambani run Reliance Industries Ltd (RIL) to NTPC’s power plants.

“Normally, marketing margins are meant in a case where there is a wholesaler, a distributor and a retailer. But in this case, there is no distributor or retailer,” said power secretary Harishankar Brahma, adding that the matter will be decided by the petroleum ministry.

Earlier, the petroleum and natural gas (PNG) ministry had said this was a commercial matter which NTPC needed to raise with the power ministry.

RIL is charging a marketing margin of $0.135 per million British thermal unit (mBtu) on sale of gas from its KG-D6 fields off the eastern coast. Government-owned NTPC was initially opposed to paying the marketing margin to RIL.

In a letter to the power ministry after signing a gas sales purchase agreement (GSPA) with RIL, it has again taken up the matter and wants a confirmation on its applicability over and above the gas price formula approved by the Empowered Group of Ministers (EGoM).

The GSPA was signed on September 23, with NTPC to buy 0.61 million standard cubic metres a day (mmscmd) at the government-approved $4.20 per mBtu for its power plants in Anta, Dadri and Faridabad. NTPC said in its letter that it had sought legal opinion on the petroleum ministry’s advice that marketing margin was purely a commercial issue between the seller and the buyer.

The legal opinion stated that “NTPC should take up the issue of marketing margin separately through the Ministry of Power...”