RIL says NTPC going back on draft gas pact

Last Updated: Tuesday, September 15, 2009 - 22:17

New Delhi: Reliance Industries has accused NTPC Chairman and Managing Director R S Sharma of going back on the terms of a draft gas sales and purchase agreement that provided for government approving its bid price of USD 2.34 per mmBtu.

In a letter to Power Secretary H S Brahma, RIL Executive Director PMS Prasad said that the draft Gas Sales and Purchase Agreement, as finalised by NTPC in May 2005, stipulated that government approval was needed for the USD 2.34 per mmBtu price quoted by RIL in the PSU`s gas supply tender.

Even "in the suit filed by NTPC before the Bombay High
Court, NTPC has sought direction from the court that RIL sign
the May 9, 2005 draft of the GSPA, which contains the
requirement of government approval to the sale price as a
condition precedent to the contract becoming effective," he
wrote.

However, NTPC has now gone to Supreme Court against RIL
amending its petition in the High Court to say that its bid
was subject to government`s pricing and utilisation policy.

Sharma had in a letter to Brahma on August 28 stated that
"RIL did not mention in its bid that the price of gas shall be
subject to approval of government."

Prasad said the proforma GSPA in NTPC`s 2004 tender had
Schedule 3.2 that related to Condition Precedents for both
seller and buyers that were to be filled at the time of
signing of GSPA and government approval of the price was
included in the draft GSPA that was agreed to by NTPC in May
of 2005.

"If NTPC was of the opinion that this condition precedent
makes the bid of RIL conditional, NTPC would have objected to
it, which NTPC has not done till date," Prasad wrote.

"On the contrary, NTPC satisfied itself that the
provisions of the Production Sharing Contract (for RIL`s KG-D6
fields) were such that RIL would require approval of the price
from the government, if the GSPA was to function as
anticipated," Prasad wrote on September 4.

RIL had in December 2005 signed the draft GSPA, provided
by NTPC in May that year, that provided for selling 12 million
standard cubic meters per day of natural gas from its eastern
offshore KG-D6 fields at USD 2.34 per million British thermal
unit price for 17 years.

NTPC had, however, not signed the GSPA and instead moved
the High Court seeking gas from RIL at USD 2.34 per mmBtu.

"If NTPC felt that RIL was imposing some new
conditionality to the bid in the form of government approval
of the price to wriggle out of the alleged concluded contract,
it would have challenged in the proceedings. Any suggestion,
to the contrary coming from NTPC, at this stage, is clearly an
afterthought and for some inexplicable reason," Prasad said.

"The letter of NTPC Chairman contains an isolated
statement which is completely misleading as it conveniently
ignores the relevant facts and inappropriately suggests that
RIL brought in the requirement of government approval later
without NTPC`s concurrence," he wrote.

Bureau Report



First Published: Tuesday, September 15, 2009 - 22:17
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