NTPC to buy 1.5 mcm extra gas from RIL: report

State-owned National Thermal Power Corp, the country's biggest power producer, will buy an additional 1.5 million cubic metres a day of gas from Reliance Industries Ltd at the government-approved price of $4.2 per unit (mmBtu) to feed its power plants in North India.

The government had allocated NTPC 4.46 mmscmd of gas from RIL's eastern offshore Krishna-Godavari D6 fields, but it currently draws only 1.81 mmscmd due to resistance from state gas utility GAIL to transport additional volumes, The Economic Times reports quoting unnamed official sources.

Close to 60 per cent of the allocated volumes were for NTPC's Kawas and Gandhar power plants in Gujarat. But NTPC did not want to use KG-D6 gas at these plants since it was in litigation with the Mukesh Ambani firm over fuel supplies to expansion projects planned at these sites.

So an empowered group of ministers (eGoM) last year decided that GAIL India will swap KG-D6 gas with fuel from other fields. Under this scheme, gas from western offshore Panna/Mukta and Tapti (PMT) fields that were currently supplying to NTPC's Northern India plants, was to be diverted to Kawas and Gandhar. The deficit at the northern India plants was then to be made up by KG-D6 gas.

The paper's sources said GAIL was however not willing to implement this. It feared that if PMT gas was supplied to Kawas and Gandhar, it would displace the costlier LNG that those plants currently buy. Kawas and Gandhar currently buy imported-LNG at about 50 per cent more then the delivered cost of RIL gas.

The petroleum ministry, the report said, a few days back convened a meeting to convey to GAIL in no uncertain terms that the EGoM decision has to be implemented at all costs. It was decided that 1.5 mmscmd of PMT gas that is currently being supplied to NTPC's northern power plants would be diverted to Kawas and Gandhar. The northern plants will then be supplied KG-D6 gas.