NTPC needs legal opinion

State-owned power major NTPC is seeking legal opinion on to ink deal with RIL for KG basin gas at the government-approved price of USD 5.20 per mmbtu for its projects except those on which it is in legal dispute with the Mukesh Ambani group.

At present, both sides are in litigation at the Bombay High Court where NTPC's plea is that it should get gas for its Kawas and Gandhar expansion power projects, for which RIL was awarded a contract after it bid lowest at USD 1.6 per mmbtu (million Bristish thermal unit) to supply 10 million standard cubic metres per (mmscmd).

The move to sign an agreement with NTPC comes in the wake of RIL entering into similar contracts with nine other power producers, including GMR Power, Essar Power and Reliance Infrastructure, owned by younger Ambani sibling Anil.

NTPC is likely to sign the Gas Sale and Purchase Agreement (GSPA) with RIL for purchasing gas from the company's eastern offshore KG D6 basin, in four weeks' time.

NTPC will get 1.67 mmscmd of gas from KG-D6. But, NTPC has received draft GSPA from RIL and it will seek legal opinion so that it's other case with RIL does not get jeopardised.

The power sector has been allocated 28 mmcmd gas out of the initial 50 mmcmd output from the KG-D6 basin, of which 7.22 mmcmd would go to eight power plants in Andhra Pradesh.

RIL has signed deals to supply gas from its KG-D6 fields to most power sector consumers, but is yet to sign it with Ratnagiri Gas and Power, the owner of the Dabhol power plant, which has been allocated 3.7 mmcmd.

Essar's 300 MW power plant in Gujarat will get 1.78 mmcmd while Anil Dhirubhai Ambani Group's 230-MW Samalkot plant in Andhra Pradesh will get 1.19 mmcmd at the government-approved rates of USD 4.14 per million British thermal unit (mmbtu) plus taxes and transportation.