RIL blames NTPC for not signing gas purchase pact

In its latest counter-attack on various allegations raised by the Anil Dhirubhai Ambani Group (ADAG), Reliance Industries (RIL) has written to the power ministry explaining its position on the gas pact with NTPC. In its letter to power secretary HS Brahma, RIL executive director and head of the group���s petroleum business PMS Prasad has blamed NTPC for not signing the Gas Sales and Purchase Agreement (GSPA) to take its allocated share of KG D6 gas.

Mr Prasad, in the letter, has emphatically stated that much against the publicised campaign regarding NTPC���s losses, the company will remain unaffected by any change in the gas price.

The Anil Ambani group had alleged that the state power utility will lose around Rs 30,000 crore due to the hike in gas prices. ���The difference in fuel price between $4.2/unit and $2.34/unit results in an increase of power costs by not more than 60 paise/unit. NTPC remains unaffected because the cost of fuel is passed on to state electricity boards,��� the letter said.

Mr Prasad has also questioned NTPC���s 10-year contract for RLNG, which, he insists, will cost the company much more than KG D6 gas. ���At an assumed price of $60/bbl for crude oil, the average delivered price for this RLNG is at $11.2/mmbtu. On the other hand, the KG D6 gas as per $4.2/mmbtu will result in a delivered price of $6.5/mmbtu,��� Mr Prasad said.





The letter does go on to state how NTPC���s actions ���defy logic��� and are ���driven by factors other than commercial prudence���. Mr Prasad has asked for the power ministry���s intervention in signing GSPA with NTPC. A senior NTPC source admitted that the higher cost can be passed on to state electricity boards and the consumers and NTPC will not really make those mammoth losses.

���We are free to source gas from wherever possible, but just because we can pass the cost through doesn���t mean we will buy it without putting our mind to it, it makes sense for us to buy RLNG now,��� the source added.

It is interesting that at a time when the government has in the Supreme Court accommodated NTPC���s case stating that the power major���s pricing has always been kept out of the purview of EGoM, RIL has now written to the power ministry.