RIL-NTPC gas price needs govt okay: Govt

RIL-NTPC gas price needs govt okay: Govt (News Courtesy By : EconomicTimes)

NEW DELHI: The government has said that the price at which Reliance Industries supplies natural gas to some power plants of state-owned utility
NTPC would have to be approved by it. That price, $2.34 per million British Thermal units (mmBtu), was arrived at through a competitive bidding in 2003. “The price offered by the contractor (RIL) to NTPC will require scrutiny and approval of the government under the PSC,” said the ministry of petroleum and natural gas in its affidavit.

The affidavit did not say if the price of $2.34 per mmBtu would eventually be approved. “The central government will take an appropriate decision in the case of NTPC as and when a need arises. Such a decision based on public interest, if in favour of NTPC, cannot be termed as discriminatory or arbitrary,” was all that the affidavit had to say.

The document clearly contradicted NTPC’s stand. The chairman and managing director of the PSU, RS Sharma, had written a letter on August 28, 2009, to power secretary H Brahma saying, “NTPC reiterates its position that RIL did not mention in its bid that price of gas shall be subject to approval of the government.” Both NTPC and RIL are fighting a legal battle in the Bombay High Court on whether the two companies had signed a final contract following the bidding.

In 2007, the government fixed a price of $4.20 per mmBtu for sale of natural gas from the Krishna-Godavari basin to some power and fertiliser companies.

The price of $2.34 per mmBtu and the question of government approval is at the heart of the epic legal battle between Anil Ambani’s Reliance Natural Resources (RNRL) and Mukesh Ambani’s Reliance Industries (RIL). The famous memorandum of understanding signed between the estranged Ambani brothers provides for supply of gas at the price no greater than price payable to NTPC. RNRL has argued that RIL is free to sell gas to customers without the government approval. RIL contests this, saying the price needs the sanction of the Union government.

The government in its affidavit seemed to support the RIL position. “The rights and obligations of NTPC and RIL can not be regarded as similar in status to the private arrangement as in the case of RIL and RNRL, as NTPC is not only a PSU but the process involved for price determination in the case of NTPC gas was by international competitive bidding.”

It further said: “the central government has on the one hand, left NTPC to establish its rights in the pending suit in the Bomaby High Court, on the other hand, has not foreclosed any options available under the PSC. However, such a decision would be taken by the competent authority having regard to the character of the PSU and other relevant circumstances having a bearing on the public interest.”

Besides the NPTC affidavit, Mukul Rohtagi, another legal eagle representing RNRL continued his arguments on Wednesday. Mr Rohtagi claimed a price of $4.20 per mmBtu would allow ‘profiteering’ by RIL, claims echoing those made by Anil Ambani. He also claimed that sale at $2.34 per mmBtu would not a losing proposition for RIL.

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Deal in Copenhagen likely, India under more pressure: Pachauri

Deal in Copenhagen likely, India under more pressure: Pachauri (News Courtesy By Hindustan Times)

Thanks to recent announcements by the US and China, there may be a deal at this month's Copenhagen climate summit, Intergovernmental Panel on Climate Change (IPCC) chief RK Pachauri said on Tuesday. This would put more pressure on India, which needed to quantify the steps it was taking to reduce global warming, he added.

"India is at the crossroads" on this issue, Pachauri said at a press conference in New Delhi, urging Prime Minister Manmohan Singh to attend the final two days of the Dec 7-18 climate summit in Copenhagen. "This will be important, as it will signify that India is a deal maker and not a deal breaker," he said.

Pachauri predicted that US President Barack Obama's announcement that his country would cut greenhouse gas (GHG) emissions by 17 per cent by 2020, compared to 2005, and China's announcement that it would reduce the GHG-intensity of its economy by 40-45 per cent by 2020, compared to 2005, would put more pressure on India to come up with similar quantitative commitments.

"The Copenhagen summit also gives us an opportunity to look at India's long-term future," added the head of the IPCC -- the group of over 2,500 scientists worldwide that brings out the benchmark assessment reports on climate change.

Making a strong pitch for the country to shift towards renewable energy sources from fossil fuels, Pachauri said "India must bargain at Copenhagen for large-scale resources to finance its solar mission".

He laid down three criteria for success at Copenhagen -- first, a collective emission reduction target by industrialised countries by 2020, which he said would be "good if it was 20 per cent"; second, financial assistance to developing countries to cope with climate change effects; and third, transfer of green technologies cheap, perhaps through a technology fund.

"If this happens there will be enormous pressure on India to make commitments," Pachauri predicted. "India should then lay its National Action Plan on Climate Change (NAPCC) on the table. The cabinet has already cleared the solar mission (one of the eight missions under NAPCC), that should be a part of it."

"The NAPCC can be a binding commitment on the part of India as a back-up if other commitments (from industrialised countries) fall in place," he added. He agreed that other NAPCC mission plans had not been firmed up yet, but said if this was done, the reduction in India's GHG intensity could be worked out as an offshoot of NAPCC. "It's simple arithmetic."

While saying "no country will reveal its cards upfront" at the start of the Copenhagen summit, Pachauri repeatedly pointed out that moving towards a greener economy was good for India in the long run.

GHG emissions -- mainly carbon dioxide -- is causing climate change, which is already reducing farm output, making droughts, floods and storms more frequent and more severe, and raising the seal level.

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