Notwithstanding its legal battle with Reliance Industries on the relevant contract, state-owned power producer NTPC has agreed to source gas from the former?s KG D6 block at a price decided by the empowered group of ministers (EgoM). The gas will be used to power NTPC?s Kawas and Gandhar expansion projects.
NTPC has approached the government to immediately allocate gas for its new gas-based capacities including the 2,600 mw Kawas and Gandhar plants in Gujarat which are stranded since 2005 due to non-availability of gas.
The move is a major departure from the PSU?s earlier stand that it would not take KG gas for these projects until its legal battle with RIL was resolved.
?The solicitor-general has given us the opinion that we can go ahead and take KG gas at a price decided by the EGoM without affecting our ongoing case in Bombay High Court,? NTPC chairman and managing director Arup Roy Choudhury said replying to a question posed by FE.
He said availability of gas would help the company accelerate work on about 7,000 mw of new gas-based capacity that NTPC has proposed.
The PSU cannot take investment decisions on projects unless fuel linkages are tied up.
In fact, NTPC substituted APM gas (in place of supply of KG gas) even for its ongoing projects at Kawas and Gandhar so that the projects could be completely delinked from RIL?s block. NTPC had contracted 12 mmscmd of gas from Reliance Industries? KG D-6 block for a period of 17 years at price of $2.34 per million British thermal unit (mmbtu) for its Kawas and Gandhar expansion projects with a capacity of 1,300 MW each. The price of gas was discovered through open international competitive bidding process with RIL. The supply arrangement is now subject of a legal dispute between the two parties in Bombay High Court.
The NTPC proposal to the government seeks release of over 22 mmscmd gas for its various upcoming power projects. Apart from Kawas and Gandhar, it will aid expansion projects of NTPC at Faridabad, Anta, Auraiya and additional capacity proposed for its Ratnagiri Gas and Power project. A fresh NTPC proposal also seeks to bring it in the forefront of the list of new allotees hoping to get KG gas once the production from D-6 block improves and EGoM decides to allocate gas in favour of new projects.