Ministries bid to settle RIL-NTPC row over gas pricing

With Reliance Industries Ltd. (RIL)-Reliance Petroleum Ltd. (RPL) war becoming murkier day by day, the union petroleum and natural gas, and power ministries are working out a solution to keep state owned NTPC out of the tussle.

The ministries are exploring the possibility of settling NTPC's row with RIL over the price of gas from the Krishna-Godavari basin.

The two ministries are of the view that the government is committed to protecting NTPC's interests, though they maintained that the two cases - NTPC-RIL and RIL-RNRL - are ''totally distinct'' from each other.

NTPC is likely to move the Supreme Court over the price at which RIL will supply 12 million cubic metres per day (mcmd) of gas from its Krishna-Godavari fields to the former's Kawas and Gandhar facilities for 17 years. (See: NTPC likely to move SC over pricing of RIL gas).

However, experts see this will put the respective ministries in an uncomfortable situation as the price.

In order to pacify the situation, the ministries are planning to annul NTPC's 2004 global tender with a promise from the Mukesh Ambani company to supply gas at a higher price of $4.2 per million British thermal unit (mBtu), but without charging an additional marketing fee, which is applicable for other buyers.

Since NTPC, in this scenario, would pay more than $2.34, the government would compensate it by some kind of a subsidy to the extent of the profit petroleum.