The country?s largest power generator NTPC, which has been entangled in a litigation over KG gas row with Reliance Industries (RIL) since December 2005, is currently analysing the impact of the petroleum ministry?s special leave petition (SLP) requesting the Supreme Court to declare the memorandum of understanding (MoU) between Ambani brothers as null and void. The apex court has slated next hearing on the matter on September 1.
Even though NTPC is not respondent in the cross appeals by RIL, RNRL and the SLP filed by the Centre, its action is quite timely as the MoU stipulates that natural gas from K-G D6 and all other gas fields from which gas will be supplied be produced as per production sharing contract (PSC) signed between the Centre and the contractor. According to pact NTPC will get 12 mmscmd, Reliance Energy 28 mmscmd and the rest to be supplied in the ratio of 60:40 to Mukesh Ambani Group and Anil Ambani Group, respectively. The Bombay High Court on June 15 upheld the MoU between Ambani brothers while the petroleum ministry has argued that the MoU is illegal and is disregard of the provisions of the PSC.
Curiously, the MoU between Ambani brothers? notes that NTPC supply agreement would be general guidance for similar agreements with other procurers. According to the MoU, Mukesh will provide the PSC and also correspondence with NTPC and the latest version of the draft contract to the Anil Ambani Group.
Further, MoU says Mukesh will personally ensure that at the time of finalisation of the binding gas supply agreement the terms provide the required comfort and stability in these agreements, even if that means some departure from the NTPC standard. Moreover, MoU makes it clear that in the event NTPC contract with RIL does not materialise or is cancelled the entitlement of NTPC (12 mmscmd) will go to the Anil Ambani Group in addition to its entitlement of 28 mmscmd in addition to this allocation from the cost and profit gas which will be available for sharing with the Union of India and RIL.
NTPC sources told FE ??The legal team, which held preliminary discussions on Sunday, will examine the fallout of the petroleum ministry?s SLP and its affidavit filed in the apex court. NTPC?s position is quite clear that it wants that the gas be supplied from K-G D6 at $2.34 per million British thermal unit for Kawas and Gandhar projects, the case for which is pending before the Bombay HC. The High Court has slated hearing on July 21. As far as the supply of 2.7 mmscmd of K-G D6 gas for other NTPC projects, it has raised objections relating to the marketing margin and take or pay provisions in the gas sale purchase agreement circulated by RIL. NTPC and RIL so far have held two rounds of discussion and both have yet to arrive at an understanding.??
Besides, sources said that petroleum ministry has argued that the HC?s order asking RIL to supply 28 mmscmd of K-G D6 gas to RNRL for 17 years at $2.34 per mmbtu is contrary to the government policies on gas utilisation and pricing under the Nelp PSCs. The empowered group of ministers on Setpember 2007 under the gas utilisation policy had finalised gas price and formula at $4.20 per mmbtu, which is without prejudice to the legal dispute between NTPC and RIL.