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NTPC not signing gas purchase agreement: RIL to PowerMin

Last Updated: Wednesday, September 2, 2009 - 16:00

New Delhi: Reliance Industries has complained
to Power Ministry about NTPC`s reluctance to sign an agreement
to buy gas from it and said that the power PSU stands to lose
Rs 15,000 crore if it imports LNG.

The government had allocated 2.67 million standard cubic
meters per day of gas from RIL`s eastern offshore KG-D6 fields
to NTPC, but unlike the 35 other customers identified for the
gas, the state-run firm is yet to sign a Gas Sales and
Purchase Agreement (GSPA).

"In our last meeting with NTPC on August 12, all issues
relating to finalizations of GSPA were resolved and NTPC was to
revert after obtaining internal approvals. However, we are
still awaiting a formal response from NTPC in spite of regular
follow-up," RIL Executive Director P M S Prasad wrote to Power
Secretary H S Brahma on August 31.

RIL had agreed to sign the GSPA with the caveat that the
agreements would be "without prejudice" to the outcome of the
case in Bombay High Court over a 2004 tender where the Mukesh
Ambani firm had quoted USD 2.34 per mmBtu as price for gas to
be supplied to NTPC`s Kawas and Gandhar plants, he said.

Instead, NTPC has signed-up to buy 2.5 mmscmd of LNG for
10 years from overseas market and the delivered cost of this
would be USD 11.2 per mmBtu as compared to KG-D6 burner tip
cost of USD 6.5 per mmBtu, leading to a loss of Rs 600 crore
per annum. Besides, NTPC buys 3-4 mmscmd LNG on spot basis,
resulting in additional outgo of Rs 900 crore per annum.

Bureau Report

First Published: Wednesday, September 2, 2009 - 16:00
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