RIL blames NTPC over reluctance to sign GSPA

In a recent development, Reliance Industries (RIL) has blamed NTPC that, even with a mutual agreement it had signed a contract in December 2005 to sell natural gas to NTPC at $2.34 per million British thermal unit (mBtu) for 17 years, the state-run power producer never reciprocated to the deal arrangement.

RIL referred to the Gas Sales Purchase Agreement (GSPA) with NTPC in December 2005, where it committed to sell gas from its KG-D6 fields at a delivered price of $3.18 per mBtu at its Kawas and Gandhar plants in Gujarat where the state-run firm was required to return two signed copies of it, which never materialized due to NTPC’s reluctance.

In a recent letter to Power Secretary, RIL said that NTPC did not sign the GSPA, instead chose to file a suit against RIL in the Bombay High Court. With the matter in court, RIL had no option but to withdraw the offer contained in the signed GSPA sent to NTPC.

NTPC wants RIL to execute the supply of gas at the price fixed in the 2004 bid of $2.34 per mBtu. But the RIL insists that the price needs the nod of the government, which in 2007 approved $4.2 per mBtu as the price of gas.