RIL-NTPC gas sale negotiations hit 'prejudice' clause roadblock

NTPC Ltd. | Power Generation/Distribution | Power | BSE: 532555 | NSE: NTPC

28 Jul 2009 Evaluate

The seemingly never-ending negotiations between RIL and NTPC over supply of gas to the public sector major’s power plants in Dadri, Anta, Auriya and Faridabad have hit a roadblock. RIL has turned down NTPC’s request to include a clause in the gas sales purchase agreement (GSPA) that the sale will be “without prejudice to the ongoing case over gas supply to NTPC’s Kawas and Gandhar plants.

NTPC has reached an agreement on most things pertaining to the GSPA for supply of 2.67 mmscmd (million standard cubic metres per day) of gas. However it says that this supply should be without prejudice to its rights and contentions in the court case. However, RIL is reluctant to give a written undertaking in this regard. This is likely to further delay the process.

The GSPA is for 2.67 mmscmd of KG gas from the 28 mmscmd gas made available by RIL for power companies under the government’s gas allocation policy. This gas would be supplied at the government-mandated price of $4.20 per million British thermal units (mmBtu).

NTPC isn’t keen on signing an agreement without this clause because it feels that doing so might affect its position in the case it is fighting in the Bombay High Court. The case pertains to supply of 12 mmscmd of KG gas at a price of $2.34 per mmbtu for expansion projects of NTPC’s Kawas and Gandhar plants in Gujarat.

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