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SC verdict may queer the pitch for NTPC

business Updated: May 07, 2010 22:46 IST
HT Correspondent
HT Correspondent
Hindustan Times
SC verdict

Will the country’s largest power producer NTPC Ltd, fighting a parallel battle against Mukesh Ambani’s Reliance Industries Ltd (RIL), bear the brunt of the Supreme Court’s verdict in the Ambani brothers battle?

Analysts, experts and government officials varied on the impact that the Supreme Court verdict will have in the battle being fought by NTPC in the Bombay High Court.

Power Minister Sushil kumar Shinde said the Supreme Court’s upholding of the government’s right to approve price and utilisation of gas was a “fair decision” and had no bearing on the gas supply dispute between NTPC and RIL.

“It has nothing to do with the RIL-NTPC case,” Shinde said shortly after a three-judge bench of the apex court ruled that private family agreements cannot over-ride the government’s right under the Production Sharing Contract (PSC) to approve price and fix users of gas.

However, analysts differed. “NTPC does not have much of a case left,” they said. “The SC has held the supremacy of the government to decide on the price. The government cannot have two prices for the power sector, one at $2.34 and the other at $4.2 per unit.”

In contrast, an NTPC official, requesting anonymity, said, “Our case is different.”

“Unlike Anil’s RNRL, we arrived at this price through a global tender. We did not negotiate sitting across the table.”

Additional Solicitor General of India Mohan Parasaran said that Empowered Group of Ministers will take a decision on the NTPC case. “NTPC is an arm of the government.”

The Supreme Court had ruled that Anil Ambani Group firm Reliance Natural Resources Ltd (RNRL) cannot claim gas at concessional rate of $2.34 per unit from RIL. The rate RNRL is claiming is the same that RIL had bid in a 2004 NTPC tender to supply 12 million standard cubic meters per day of gas to the state utility.

The contract for the supply could not be concluded over differences and NTPC dragged RIL to the Bombay HC seeking performance of the contract.