Subramanium backs NTPC in D6 gas row

Vol 14, PW 7 (23 Sep 10) Midstream & Downstream

Different rules clearly apply in India for state-owned companies like NTPC, which wants Reliance D6 gas at just $2.34/mmbtu, while others are forced to pay the top rate of $4.2/mmbtu.

PETROWATCH learns India’s solicitor-general Gopal Subramanium is standing firmly behind NTPC’s long-standing claim for cheaper D6 gas price because “it is a government company”. In an extraordinary intervention, copies of Subramaniam’s ‘opinion’, in which he cites Article 21 of the PSC for block D6 to back his support for NTPC, were circulated at the last meeting of the cabinet’s Empowered Group of Ministers on July 28.

Enraged gas sector sources say Subramaniam has no right to interfere, especially since NTPC and Reliance are still embroiled in a long drawn-out battle over the D6 gas price in the Bombay High Court. “Subramanium is wrong to say Reliance can be asked to sell it gas at $2.34/mmbtu because NTPC is a government company,” says a gas sector source.

Only companies ‘nominated’ by the government to get D6 gas can get a special price, he adds. “NTPC has not been nominated by the government to receive D6 gas and even if it was, gas must be priced according to Article 21 of the PSC.

” Interpretation of sub-clause 21.6.2 (b) of the PSC is clear, says this source. “No price approval can be granted by the government unless sought by the contractor (Reliance).

” In short, it is Reliance’s prerogative to propose a D6 gas price. “The government has no right to propose or impose a price.

” Who can forget that the oil ministry famously rejected Mukesh Ambani owned-Reliance’s proposal to sell gas to younger brother Anil Ambani at $2.34/mmbtu – a price based on what Reliance had earlier quoted NTPC “If this price could be rejected for Anil Ambani,” we hear, “how can the government now approve it for NTPC”