Gas wars: RIL bashes NTPC stance in letter to government

Accusations continue to fly back and forth in the murky four-way gas war among Reliance Industries Ltd, Reliance Natural Resources Ltd, the union government, and the National Thermal Power Corporation, which is itself run by the government.

In the latest developments, the Mukesh Ambani-controlled RIL has accused NTPC of going back on the terms of a draft gas sales and purchase agreement that provided for government approving its bid price of $2.34 per mmBtu.

At the same time, Reliance Natural Resources, controlled by Mukesh's brother Anil Ambani, on Monday moved the Supreme Court seeking permission to become a party to NTPC's case against RIL for not supplying natural gas from its Krishna-Godavari block at $2.34 per million British thermal unit and seeking a much higher price.

The government on its part insists that it has the sole right to decide on the pricing and distribution of natural gas, on the ground that it is a 'national resource'. The case is now before the Supreme Court. NTPC's stand is that RIL is seeking to dilute the original price agreement. In a situation that could probably only happen in India, NTPC's stand is in almost at direct variance with that of the government that owns it.

In a letter to power secretary H S Brahma, RIL executive director P M S Prasad said the draft gas sales and purchase agreement (GSPA) as finalised with NTPC in May 2005 stipulates that government approval is needed for the $2.34 per mmBtu price quoted by RIL in its gas supply tender.

"Even in the suit filed by NTPC before the Bombay High Court, NTPC has sought direction from the court that RIL sign the 9 May 2005 draft of the GSPA, which contains the requirement of government approval to the sale price as a condition precedent to the contract becoming effective," the letter stated.