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Home News Power Sector News Power ministry asks oil ministry to issue KG basin gas for NTPC @ $2.34/mbtu

Power ministry asks oil ministry to issue KG basin gas for NTPC @ $2.34/mbtu

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NTPCFinally, The power ministry has asked the petroleum ministry to place a proposal before the empowered group of ministers (EGoM) to allot 12 million standard cubic meters per day (mscmd) of gas from the KG-D6 block to state-run NTPC at $2.34 (about Rs 107) per million British thermal unit (mBtu).The power ministry’s proposal comes despite a pending court battle between NTPC, India’s largest power generator, and Mukesh Ambani-led Reliance Industries (RIL) over the pricing of gas from the same field.

In his letter dated January 4, Power Secretary H S Brahma had argued that the proposed gas allocation be made to NTPC at the discovered international competitive bidding price of $2.34 per mBtu as early as possible, without waiting for the outcome of the pending NTPC suit in the Bombay High Court.

Sources at NTPC and RIL refused to comment on this issue.Senior petroleum ministry officials said they were not in favour of making an allocation without the high court delivering its judgment. Besides, no meeting of EGoM, headed by Finance Minister Pranab Mukherjee, has been scheduled so far.

Interestingly, EGoM has already made an allocation of 80 mscmd gas on firm basis and 10 mscmd on a fall-back basis and any allocation to supply 12 mscmd to NTPC cannot be made without cancelling allocation of other consumers. RIL currently produces 60 mscmd of gas, and plans to scale it up to 80 mscmd shortly.

The trigger for Brahma’s communication is the central government’s affidavit filed on December 1, 2009, in the Supreme Court. The Centre in its affidavit says that “the rights and obligations of NTPC and RIL cannot be regarded as similar as private arrangements as in the case of RIL and Reliance Natural Resources (RNRL). The price offered by the contractor to NTPC will require scrutiny and approval of the government under the production sharing contract. The central government will take an appropriate decision in the case of NTPC as and when a need arises. Such a decision based on public interest, if in favour of NTPC, cannot be termed as discriminatory or arbitrary.”

The government further added that “it is submitted that a decision in respect of NTPC will be taken as and when either one of the two contingencies occur — the rights of NTPC get established in the pending suit or that factors of overriding public interest warrant any government intervention.”

Sources said the issue was deliberated at a meeting on December 5 between the solicitor general and officials of the ministries of power and petroleum. Based on the discussions at that meeting, Brahma has appealed to the petroleum ministry to take up the matter with the EGoM for an early decision.

Source - Business standard

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