The Hindu Business Line : Cabinet Secy to help end gas deal dispute

The Government has asked the Cabinet Secretary to evolve modalities for resolving the ongoing row between NTPC Ltd and Reliance Industries Ltd (RIL) over a pact for supply of gas by RIL for NTPC's Gandhar and Kawas expansion projects.

At a high level meeting recently, Government representatives observed that the ongoing dispute between NTPC and RIL was not on the price of gas but on the fact that the current contract provides for unlimited liability for not buying and not making gas available for sale on RIL, officials involved in the exercise said.

The dispute is currently before the Bombay High Court after NTPC, in December last year, moved the court against RIL requesting that the contract be executed by the latter in accordance with the conditions of the gas sales and purchase agreement (GSPA) signed by RIL and NTPC for supply of 132 trillion British thermal units of gas to NTPC's 2,600-MW expansion projects in Kawas and Gandhar in Gujarat.

Supply rules

The gas was to be supplied at the rate of $2.97 per million British thermal unit for 17 years starting 2007, according to the agreement. RIL subsequently objected to a number of aspects in the agreement ranging from availability of gas supply to the uncapped liability clause in the GSPA, following which NTPC moved the Bombay High Court.

During the hearing on the issue at the High Court on January 16, RIL stated that it had not concluded its contract with NTPC for supply of gas to latter's projects in Gujarat. "The contract is at a premature stage and not concluded," RIL had said in an affidavit. RIL had also contended that the contract could not be enforced as enough gas was not available in the market. The court has now posted March 28 as the date for the final hearing.

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