NTPC may sign deal with RIL for gas at $4.20/mmBtu

Last Updated: Tuesday, September 22, 2009 - 16:34

New Delhi: After a series of flip-flops,
NTPC is likely to finally sign an agreement with Reliance
Industries this week to buy government alloted natural gas at
officially approved price of USD 4.20 per mmBtu.

However, the state-run power utility may initially draw
less than one-fourth of its allocation.

"NTPC has informed that they have got internal approvals
for signing of the Gas Sales and Purchase Agreement (GSPA) and
it may be signed in the next couple of days," an Oil Ministry
official said after a meeting called to review unsigned GSPAs.

The government had last year allocated 2.67 million cubic
metres per day of KG-D6 gas to NTPC`s Kawas, Gandhar and Anta
power plants in Gujarat, a move that drew huge protests from
RIL that wanted the pending legal dispute over gas it had
committed in a 2004 tender of the state-run firm was resolved.

NTPC vehemently fought back saying its litigation against
RIL was for future expansion projects at Kawas and Gandhar and
the present supplies were for present plants.

After the allocation was confirmed, it did a volte-face
refusing to take gas for existing Kawas and Gandhar plants.

"Against an allocation of 2.67 mmscmd, GSPA for only 0.61
mmscmd of gas for Anta unit will be signed for now," he said.
"Government will have to take a call on reallocating the
remaining gas to NTPC`s other plants."

NPTC, which unlike the 40-odd customers of KG-D6 gas was
initially opposed paying USD 0.135 per mmBtu marketing margin
to RIL, has agreed to pay the levy.

The official said of the initial 40 mmscmd of output from
RIL`s KG-D6 field, NTPC, Dabhol power plant, Essar Power and
Oil and Natural Gas Corp (ONGC) are yet to draw a single unit.

RIL can produce over 60 mmscmd of gas from KG-D6 fields
but is restricting output to 37 mmscmd in the absence of
offtake from existing customers like NTPC and failure of the
government to name consumers beyond the initial 40 mmscmd.

At the meeting today, Ratnagiri Gas and Power Pvt Ltd --
the firm that runs the 2,150-MW Dabhol power plant in
Maharashtra -- informed that it will begin drawing 5.67 mmscmd
gas from October 1, the official said.

ONGC, which had been allocated 0.4 mmscmd for its LPG
extraction plants, was likely to sign GSPA by mid-October as
it was yet to arrange for a suitable swap, he said.

KG-D6 gas is lean (only methane) and cannot be used to
extract LPG. So this gas will have to be swapped with some
users who are currently using rich-gas from western offshore.

The government had allocated 3 mmscmd of KG-D6 gas for
LPG plants, and of this state gas utility GAIL has taken 2.59
mmscmd.

Essar Power was negotiating a gas transportation
agreement for taking KG-D6 gas at its Hazira plant in Gujarat.

Bureau Report



First Published: Tuesday, September 22, 2009 - 16:34

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