Reliance Industries' bid to supply natural gas to PSU NTPC at a rate of $2.34 per million British thermal unit is not in accordance with the government policy for pricing of the fuel, an oil ministry note said.
The Mukesh Ambani company had in 2004 offered a delivered price of $3.18 per mBtu for gas from its eastern offshore Krishna Godavari block KG-D6 to NTPC's Kawas and Gandhar power plants in Gujarat.
"Based on the letters from the ministry of power and media reports, it emerges that the price has been determined by adopting reverse auction scheme i.e. a bidder offering the lowest gas price was selected by NTPC. This procedure obviously is in contravention to the provisions of the production sharing contract (that stipulates gas to be sold at maximum possible price)," the undated ministry note said.
The comments assume significance in view of observations by a committee of secretaries, which was asked to look into a new price formulation proposed by RIL, that approving an alternative price would weaken NTPC's case. The NTPC is in court seeking RIL to honour the 2004 bid, a firm contract for which had not be signed due to differences over certain terms.
The Mukesh Ambani company had in 2004 offered a delivered price of $3.18 per mBtu for gas from its eastern offshore Krishna Godavari block KG-D6 to NTPC's Kawas and Gandhar power plants in Gujarat.
"Based on the letters from the ministry of power and media reports, it emerges that the price has been determined by adopting reverse auction scheme i.e. a bidder offering the lowest gas price was selected by NTPC. This procedure obviously is in contravention to the provisions of the production sharing contract (that stipulates gas to be sold at maximum possible price)," the undated ministry note said.
The comments assume significance in view of observations by a committee of secretaries, which was asked to look into a new price formulation proposed by RIL, that approving an alternative price would weaken NTPC's case. The NTPC is in court seeking RIL to honour the 2004 bid, a firm contract for which had not be signed due to differences over certain terms.
Via: India Economic Times
