Centre pledges support to NTPC in gas dispute

Centre pledges support to NTPC in gas dispute

Asserts that interests of psu would not be compromised in the supply of gas

Sources revealed that the assurance was conveyed by Petroleum Secretary R S Pandey at a meeting with the Power Secretary H S Brahma here on Wednesday.

This is the first ever meeting held between the ministries over the issue of gas pricing ever since NTPC initiated legal proceedings against RIL. At the meeting, sources said that the Petroleum Ministry asserted that interests of public sector undertakings would not be compromised on matters relating to supply of gas from the K-G basin.

2004 tender

NTPC currently has a legal tussle with RIL seeking supply of 12 mmscmd gas for its Kawas and Gandhar projects at $2.34 per mmBtu and claims that the RIL had quoted the gas price at $2.34 per mmBtu in response to the tender floated in 2004.

RIL though, agreed to supply gas to the NTPC at that rate initially, subsequently said that it would supply the gas to the power sector PSU at the rate of $4.2 per mmBtu — a price fixed by the Empowered Group of Ministers (EGOM). Interestingly, while the petroleum ministry is understood to be supporting NTPC in the case, it has been opposing demand of the Reliance Natural Resources Limited (RNRL) owned by Anil Ambani to get gas from the KG basin owned by the RIL at a similar price.

Currently both the Ambani brothers are engaged in bitter legal battle over supply of natural gas from KG basin. RNRL is demanding that the Reliance Industries Limited must supply the gas at a discount as agreed in their bilateral Memorandum of Understanding MOU).

In 2006 the matter went to the Bombay High Court with Anil alleging that Mukesh was not fulfilling his obligations as stipulated in memorandum of understanding (MOU).

Finally the Bombay High Court recently ruled that Reliance Industries Limited should supply gas to RNRL at $2.34 per million metric British thermal unit (mmBtu) — nearly half the $4.20 price in an interim court order in January.

The legal battle reached the Supreme Court with the government making a petition to intervene in the case, arguing that the natural gas is national property and that the private agreement between the Ambanis over the gas is not valid.

The Petroleum Ministry is of the view that a private family MOU could not impinge on government’s right to approve price and fix usage of gas.

Panel takes no decision on row

The ministerial panel set up to decide on the government’s stand on the Krishna-Godavari gas row, will meet again Thursday after an informal round of talks here Wednesday.

The high-level panel, headed by Finance Minister Pranab Mukherjee met ‘informally’, according to sources.

With no decision being reached Wednesday, the ministerial panel is likely to meet again Thursday.

Prime Minister Manmohan Singh had formed the panel to coordinate the government’s legal stand over two overlapping disputes - supply of gas by Mukesh Ambani-headed Reliance Industries to Anil Ambani’s Reliance Natural Resources, being heard in the Supreme Court, and between Reliance Industries and state-run power utility NTPC, which is being adjudicated in the Bombay High Court.

The panel also took the view that an elaborate guideline for the use of natural gas among various sectoral claimants is already in place and a future course of action should be built upon the same.