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RIL refuses gas for NTPC

RIL has refused to supply any gas to NTPC’s power plants from the gas allocated by the Empowered Group of Ministers to existing gas-based power plants in the country.

business Updated: Feb 18, 2009 10:34 IST
Anupama Airy

In what could spell a fresh bout of trouble for power producer NTPC Ltd, Reliance Industries Limited (RIL) has refused to supply any gas to NTPC’s power plants from the gas allocated by the Empowered Group of Ministers to existing gas-based power plants in the country.

RIL is currently involved in a legal battle against NTPC on the issue of gas supply. It has written to the petroleum ministry saying: “In the backdrop of continuing litigation, it is completely inappropriate for the government to require RIL to enter into commitments for sale of gas with NTPC.”

It added that “RIL would be completely within its rights to exercise the option of not doing so.”

RIL further said that an agreement to sell gas to a “litigious customer” with whom RIL has a pending litigation not only exposes it but also its joint venture partner Niko to “an unacceptably high risk of contract non-performance.”

“It is extremely unfair to require us, by a direction, to supply gas to a buyer against the interests of RIL, its
shareholders and our joint venture partner,” it said in its letter.

Pending the outcome of the ongoing litigation between NTPC and RIL, the ministry of power had proposed gas allocation to NTPC’s power projects from RIL’s KG-D6 gas fields under the government’s gas utilisation policy.

The EGoM had decided that under the policy, out of the first 40 MMSCMD gas to be produced by RIL, as much as 18 million standard cubic meters of gas per day (MMSCMD) would require to be supplied to the existing gas-based power plants.

A senior power ministry official requesting anonymity said, “We have received a letter in this regard from the petroleum ministry on February 11, where they have conveyed RIL’s views against the supply of gas to NTPC.”

“RIL’s views have been noted and our minister Sushil Kumar Shinde will take up the matter in the next meeting of the EGoM. At this stage, we will not like to divulge any further details,” the official said.