Govt to side with NTPC; will file plea

Written by fe Bureaus | Mumbai | Updated: Aug 26 2009, 06:25am hrs
The Centre proposes to file an application in the Supreme Court this week, stating that its decisions on gas pricing are without prejudice to NTPCs case against Mukesh Ambani-controlled Reliance Industries. The move follows a group of ministers decision on Tuesday to protect NTPCs interest in procuring KG-D6 gas from RIL at the contracted price of $2.34 per mmBtu.

The ministerial panel headed by finance minister Pranab Mukherjee decided that the government would in its submission clarify that the $4.20 per million British thermal unit (mmBtu) price fixed by it for the KG-D6 gas was without prejudice to NTPCs case seeking 12 million cubic metres per day of gas at the price of $2.34 per mmBbtu committed in 2004.

The application would also say that RIL cannot take refuge under the government stand that it alone had the right to approve gas pricing to deny NTPC gas, as the $4.20 per mmBtu price would apply to all power plants of NTPC except Kawas and Gandhar expansion projects for which RIL had committed gas at $2.34 per mmBtu in an international competitive bidding.

Sources said that in such a situation NTPC will not file any petition to become a party to the cross-petitions filed by RIL and RNRL. The apex court is slated to hear the case on September 1.

Top source told Fe that the interlocutory application would clarify that NTPCs case against RIL was different from the dispute between the RIL and RNRL as its price was based on arms length global bid. On the other hand, RNRLs claim over KG-D6 gas was based on a private, family agreement.

Source said the group of ministers has, however, given NTPC the option to appeal against any aspect of the case in the Bombay High Court.

The high court had recently dismissed NTPCs submission, allowing RIL to change its submission incorporating the empowered group of ministers decision on gas utilisation policy taken on September 12, 2007.

Law minister Veerappa Moily told reporters on Tuesday that the NTPC issue had been sorted out and there would be no more meetings of the ministerial panel. Moily said the petroleum ministry has already filed an SLP and if any amendment is to be filed they will do it. Asked about the specific outcome, he said: That you can see in the Supreme Court...Now the ball will be in the court of the Supreme Court.

Meanwhile, the Anil Ambani group has, in a letter to the petroleum ministry, questioned RILs explanation for a more than three-fold jump in costs to $8.83 billion for developing the gas fields. The group requested the government to expedite the CAG audit and appoint an international expert to revalidate the expenses.

RIL has once again made vague and general remarks in its letter (to the government) without providing any substantial material justifying why the capital expenditure on KG-D6 gas has gone up from Rs 12,000 crore to Rs 45,000 crore, when the production only doubled from 40 mmscmd to 80 mmscmd, ADAG said in a letter sent to the petroleum ministry.

Questioning the impartiality of independent experts appointed by the directorate general of hydrocarbon, the letter suggested that a reputed international expert with experience in deep-water blocks should revalidate the capex.