Protect national interest in gas supply, says house panel

A Parliamentary Committee today expressed serious concern that in the ongoing legal battle over the supply of gas by Reliance Industries Limited...

A Parliamentary Committee today expressed serious concern that in the ongoing legal battle over the supply of gas by Reliance Industries Limited (RIL) to state-run power giant NTPC, commercial considerations have taken precedence over national interest. The committee asked the government to ensure proper safeguards to thwart such recurrences in future. The panel was also peeved at the power sector having been given second preference in gas supply and demanded higher allocation to the PSU.

In its latest report, the Lok Sabha Committee on Public Undertakings (COPU) observed “…from the ongoing legal battle regarding the gas supply by RIL to NTPC that commercial interest is taking precedence over national interest. In the opinion of the Committee, the government should take early appropriate legal and legislative measures to ensure proper safeguards and to thwart such recurrences in future and protect the nation’s interest.” In 2002 NTPC had initiated a process of international competitive bidding for supply of gas/Liquefied Natural Gas (LNG) for expansion of its two existing projects-Kawas and Gandhar for a period off 17 years. RIL, which emerged as the L 1 bidder and it was subsequently awarded to the Mukesh Ambani-promoted company. However RIL has not yet signed the Gas Supply and Purchase Agreement (GSPA) and the matter is now sub-judice in the Bombay High Court.

NTPC has six gas-fired power stations with total installed capacity of 3605 Mega Watts (MW). The estimated gas requirement to operate the plants at 90 per cent Plant Load Factor is around 17.35 MMSCMD. There are long-term agreements with Gas Authority of India Limited (GAIL) for 12.93 MMSCMD of gas under the Administered Price Mechanism category for these gas stations-Anta, Auraiya, Dadri, Faridabad, Kawas and Gandhar. Owing to the shortfall in gas supply, the PSU had sought 7 MMSCMD gas from the Panna-Mukta-Tapti gas for its stations.

Power Minister Sushil Shinde is also understood to have taken up the issue with Prime Minister Manmohan Singh to ensure the same. Besides, it is also launched efforts to tie up on RLNG on a long-term basis. The PSU had also approached international companies for gas supply during 2004 including LNG suppliers, domestic natural gas suppliers and also the re-gasification service providers to meet the shortfall at its stations. “However, the response has been lukewarm resulting in no significant quantity getting tied up,” sources in the PSU said.

Moreover, the navratna company has been also trying to explore participation in the various elements of LNG value chain including exploration and production, liquefaction, shipping and re-gasification. It has also been approaching the oil PSUs in any identified opportunity for participation in bidding of oil/gas exploration blocks abroad. To meet the current shortfall, NTPC is sourcing gas at market prices on short-term basis, most of which is RLNG, at significant higher prices than domestic gas prices.