NTPC not signing gas purchase agreement: RIL to PowerMin

Reliance Industries has complained to power ministry about NTPC's reluctance to sign an agreement to buy gas from it and said that the power PSU stands to lose Rs 15,000 crore (Rs 150 billion)on buying imported LNG.

The government had allocated 2.67 million standard cubic meters per day of gas from RIL's eastern offshore KG-D6 fields to NTPC, but unlike the 35 other customers identified for the gas, the state-run firm is yet to sign a gas sales and purchase agreement.

"In our last meeting with NTPC on August 12, all issues relating to finalisation of GSPA were resolved and NTPC was to revert after obtaining internal approvals. However, we are still awaiting a formal response from NTPC in spite of regular follow-up," RIL executive director PMS Prasad wrote to power secretary HS Brahma on August 31.

RIL had agreed to sign the GSPA with the caveat that the agreements would be 'without prejudice' to the outcome of the case in Bombay High Court over a 2004 tender where the Mukesh Ambani firm had quoted $2.34 per mmBtu as price for gas to be supplied to NTPC's Kawas and Gandhar plants, he said.

Instead, NTPC has signed-up to buy 2.5 mmscmd of LNG for 10 years from overseas market and the delivered cost of this would be $11.2 per mmBtu as compared to KG-D6 burner tip cost of $6.5 per mmBtu, leading to a loss of Rs 600 crore (Rs 6 billion) per annum. Besides, NTPC buys 3-4 mmscmd LNG on spot basis, resulting in additional outgo of Rs 900 crore (Rs 9 billion) per annum.