Last Updated : 07 September 2009 at 15:50 IST

Reliance Vs NTPC: Who buys, who sells?

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MUMBAI (Commodity Online): Reliance Industries has claimed that the government of Gujarat is all set to benefit substantially if NTPC continues to buy gas from RIL.

In a letter to S Jagdeesan, Gujarat’s Principal Secretary, Energy & Petrochemicals & Chairman, Gujarat Urja Vikas Nigam Ltd, RIL has quoted its letter to the central government dated Aug 31, 2009 wherein a few discrepancies were pointed out, especially related to purchasing/bidding of gas from global buyers.

As per the allocation of KGD6 gas made by the Government of India, gas in Gujarat is being supplied by RIL to all the power plants in Gujarat barring that of NTPC.

RIL claims that its gas distribution has benefitted Gujarat by generating more power at lower cost since the price of KGD6 gas is lower compared to the price gas from other sources in the Indian market.

And since NTPC is also a major supplier of gas to the state’s power plants, procurement of gas from RIL by NTPC will have additional benefits to the state in terms of lower tariffs.

In the letter to union government, RIL has pointed out its KGD6 gas is currently not only the cheapest available gas in the country but has already enabled other power plants to reach 90% PLF.

But NTPC has been claiming that buying gas from KGD6 at government approved price will result in losses and thereby forcing the power major to increase its base price, a claim that RIL pooh poohs.

In the letter, RIL claims if ‘NTPC buys gas from KGD6 it would actually result in significant reduction in the cost of power purchased by the SEBs from NTPC compared to the cost at which the SEBs are today being forced to buy power from NTPC.”

RIL is actually accusing NTPC of defying logic and thereby losing out opportunities to save money and time.

But its letter to Gujarat government is nothing but a reminder that its commitment to state government is firm irrespective of what NTPC does. And as major power buyers - especially the state of Gujarat- if the state governments can put pressure, it can always be a bonus.