NTPC won’t suffer if it buys costly gas

NTPC Ltd will not lose any money even if it was to get natural gas at higher prices.

State power utility NTPC Ltd will not lose any money even if it was to get natural gas at prices higher than those committed by Reliance Industries five years ago,the Power Ministry has told the Committee on Public Undertakings.

“In the event that gas is not supplied to NTPC at the rate of USD 2.34 per mmBtu,the burden of extra price of gas would be passed on to the consumer as the fuel cost is a pass through as per regulations for fixing tariff under Electricity Act,2003,” COPU quoted the ministry’s submission to it.

COPU had gone into the dispute over supply of gas by RIL to NTPC after MPs including Amar Singh sought a probe by investigating agencies into the role of NTPC top management and the officials of the Power Ministry over the tardy pace of litigation.

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NTPC had taken RIL to Bombay High Court in December 2005 seeking direction to RIL to implement a contract for supply of 12 mmscmd of gas at USD 2.34 per mmBtu for 17 years.

MPs had alleged that NTPC management did not show adequate interest in protecting the interest of the company. Power Ministry,however,did not see any tardiness on NTPC’s part,the COPU report of October 26 said.

“Power Ministry has furnished a very comprehensive reply covering all aspects of the case… From the sequence of events it appears that the delay in settlement of the dispute is more due to the complex judicial process rather than any serious lack of due diligence on the part of NTPC and Ministry of Power,” the COPU report said.

Since the matter was sub-judice,the Committee decided to desist from expressing opinion on the dispute.

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RIL had,in 2004,bid for an NTPC tender for supply of the gas for expansion of NTPC’s Kawas and Gandhar power plants in Gujarat. However a gas sale and purchase agreement was not signed over differences between the two over certain clauses in the contract.

The power ministry in its submissions to COPU said it is taking “appropriate steps”,along with NTPC,to protect the interests of the company.

“These steps include approaching Ministry of Petroleum and Natural Gas to prevail upon RIL to sign the Gas Sale and Purchase Agreement and expediting. the case in the Bombay High Court,” it said.

The Power Ministry had first sought the Oil Ministry’s assistance in the matter in May 2006.