RIL kicks off new blame game

Says it signed contract to sell gas at agreed price & NTPC did not

RIL said that it had on December 14, 2005, sent a signed Gas Sales Purchase Agreement (GSPA) to NTPC committing to sell gas from its KG-D6 fields at a delivered price of US$3.18 per million British thermal unit at its Kawas and Gandhar plants in Gujarat and asked the state-run firm to return two signed copies of it.

“NTPC, however, did not sign the GSPA, instead chose to file a suit against RIL in the Bombay High Court for the reasons best known to them,” RIL Executive Director P M S Prasad wrote to Power Secretary H S Brahma on August 31. “With the matter in court, RIL had no option but to withdraw the offer contained in the signed GSPA sent to NTPC.” Further, Prasad rubbished NTPC’s claims that a contract was concluded between the two firms and RIL was now trying to wriggle out because of the sharp upward movement in global energy prices. “Nothing can be farther from the truth.”

“Our own faith in the bidding process is demonstrated by the fact that in December 2005, when the crude oil prices had increased to US$57 per barrel compared to US$27 per barrel at the time of submission of the bid, RIL signed the GSPA with a gas price of US$2.34 per mmBtu for 17 years,” he wrote. RIL having emerged as the lowest bidder accepted the Letter of Intent (placed by NTPC) based on the premise that the outstanding provisions of the draft GSPA would be agreed to between RIL and NTPC. Most of the issues were settled and RIL’s liability in case of default was the only contentious issue.