The National Thermal Power Corporation (NTPC), which has sought to buy natural gas from Reliance Industries' KG-D6 fields in the eastern offshore for itself, has now come out strongly against sale of the gas to its joint venture Dabhol power plant.
State-run NTPC, which had earlier been denied access to KG-D6 gas due to RIL's ongoing court battle with Anil Ambani group firm Reliance Power, is now using RIL's plea to oppose sale of KG-D6 gas to Ratnagiri Gas and Power Pvt Ltd.
The board of the Dabhol power company is now split over sourcing gas for the mega power plant, part of which will come from imports.
Ratnagiri Gas and Power Pvt Ltd has been allocated 2.7 million cubic meters per day of gas from the KG-D6 fields for a period till September 2009 and another 8.5 mmcmd thereafter.
NTPC, opposes the move while the other promoter GAIL is in favour of it. The board of RGPPL is meeting tomorrow to consider the gas sale and purchase agreement.
RGPPL has been offered gas at the rate of $4.20 per million British thermal units, 25 per cent cheaper than the cost of imported fuel.
Ratnagiri Gas and Power has a contract with Petronet LNG Ltd for 5.4 million cubic meters per day of imported LNG till September, but at a higher price of $5.52 per mmBtu.
NTPC, which has been allocated 2.67 mmcmd gas from KG-D6, is yet to sign the GSPA and has sought legal opinion.
RIL has signed gas sale contracts with all other buyers for the sale of a total of 18 mmcmd gas from KG-D6 earmarked for the power sector.
The delivered cost of Petronet gas would come to $6.32 per mmBtu while that of KG-D6 gas would be $5.4 per mmBtu.
While the exact cause of NTPC's opposition to RIL gas sale to Dabhol power plant is not known the two companies had a dispute dating back to June 2004 when RIL and NTPC failed to sign a gas supply pact for the latter's Kawas and Gandhar projects over issues such as liability in the case of default.