Power ministry may take NTPC case to EGOM

With the government making a distinction between the privately-run Reliance Natural Resources Ltd (RNRL) and the government-run NTPC Ltd in relation with the gas dispute with Reliance Industries Ltd (RIL), the ministry of power is likely to take up NTPC’s case with the Empowered Group of Ministers (EGoM). A senior official said the power ministry would approach the EGoM directly instead of routing its request through the Ministry of Petroleum and Natural Gas. In the past, both the power ministry and NTPC, the largest power generator in the country, have asked the Ministry of Petroleum and Natural Gas to push NTPC’s case with the EGoM. “Now, the power ministry will approach the EGoM directly,” said the official. The EGoM is headed by Finance Minister Pranab Mukherjee and has Petroleum Minister Murli Deora and Power Minister Sushilkumar Shinde as members.

The Supreme Court had on May 7 ruled in favour of the government-determined price of $4.2 per million British thermal unit (mBtu), but did not make any comment on the NTPC dispute. NTPC suit against RIL is pending in the Mumbai High Court. “NTPC can withdraw the case if the government takes a decision on the issue,” said the official. RIL had, in 2004, bid for an NTPC tender to supply 12 mscmd gas to the state utility for expansion of its Kawas and Ghandhar plants in Gujarat. However, the tender was not executed and NTPC decided to file a case in 2005. The Ambani family agreement had taken the RIL offer price of $2.34 for NTPC as the basis of gas to be supplied to RNRL.

Though Mukesh Ambani-controlled RIL in 2006 sought the government approval, under the production-sharing contract (PSC), for $2.34 price for Anil Ambani’s RNRL, it did not seek approval for NTPC since the matter was sub judice. Former NTPC chairman, T Shankarlingam, in his presentation to the a committee of secretaries, in July 2007, had even asked the Ministry of Petroleum and Natural Gas to accord a suo motu approval to the gas price offered by RIL under the tender. He had said, even though RIL had not sought the price approval for gas supply to NTPC under the NTPC-RIL contract, the government could suo motu approve it, based on letters written by the power ministry and NTPC. The petroleum ministry, however, rejected the RNRL price in 2006, saying it was not arrived through an arm’s length relationship. It has so far not pushed NTPC’s case with the EGoM.