NTPC, which has not yet sign gas sale purchase agreement (GSPA) with Reliance Industries (RIL) for the supply of 2.7 mmscmd of KG D-6 gas for its projects other than Kawas and Gandhar for which the legal battle is on, has sent a fresh missive to RIL early this week saying that they continue to differ over the GSPA?s provisions on marketing margin and take or pay. NTPC sources told FE, ??For marketing margin, it will be subject to the confirmation of the government and for take or pay clause it will agree only after talking to its beneficiaries.??
NTPC, which has been invited by RIL for discussion on these contentious issues on July 17, has argued that as per the empowered group of ministers (EGoM) decision on KG D-6 gas price and its formula there is no stipulation for marketing margin over and above the price. Thus the charging of marketing margin be subject to the confirmation of the government.
NTPC reiterated that there is no mention of marketing margin in the EGoM?s decision of September 2007 and thus it was against this provision in GSPA.
On the take or pay issue, NTPC claimed that the clause is skewed as the seller (RIL) gets protected at the cost of buyer (NTPC) as the entire risk is passed on to the buyer. Under such circumstances, NTPC said, as the fuel becomes a pass through it will need to talk to its beneficiaries mainly state utilities and until and unless they agree it cannot accept this clause.
According to the GSPA clause, in the recovery period the gas will be given at the rate of prevailing price and if the price is higher the buyer has to pay the higher price. However, if the prevailing price becomes lower, then the level at which the buyer had earlier paid for the gas but not consumed, the buyer will be given a credit of the prevailing lower price. In fact NTPC said that the buyer will have to pay an inequitable clause as the buyer has to pay the price initially as an advance that get credit at end.