The Hindu Business Line : NTPC to take legal steps to enforce contract with RIL

NTPC Ltd plans to take "legal and other steps" against Reliance Industries Ltd to enforce a natural gas supply contract, the Government told Parliament on Wednesday.

In a written reply to a query in Rajya Sabha, the Power Minister, Mr P.M. Sayeed, said his Ministry is also trying to initiate "appropriate steps" for revising RIL's production sharing contract.

In reply to a query on RIL seeking deviations from its contract with NTPC, Mr Sayeed said, "NTPC is taking legal and other steps for enforcing the contract. The Power Ministry has written to the Petroleum and Natural Gas Ministry for initiating administrative measures for enforcing the contract."

This comes in the wake of Reliance Industries Ltd "seeking major deviations" from a contract it signed with NTPC for supply of gas needed to fire two of its upcoming power plants in Gujarat. The deviations mainly relate to limitation of liability, gas supply obligation and development and production plans, he said. "The changes sought by RIL will have adverse commercial impact on NTPC," the Minister said.

Reliance had won a contract to supply 3 million tonnes of natural gas to NTPC. NTPC had signed a Letter of Intent with RIL in June 2004 for gas supplies to its 1,300 MW each Kawas and Gandhar expansion projects following a bidding process, which included a Gas Sale and Purchase Agreement (GSPA). The utility needs the gas to fire the 2,600-MW capacity expansion, which is slated for commissioning in the second half of 2007.

In light of Reliance backtracking from the initial agreement clauses, NTPC had written a letter earlier this week to the Power Ministry, asking it to take up the matter with the Petroleum Ministry to ensure that RIL signs the GSPA at the earliest and develops its gas fields and related pipeline network as per the original schedule.

The NTPC stock closed the day's trading at Rs 104.40 on the BSE, up from the opening price of Rs 102.90. The 52-week high for the share was at 110.25 while the 52-week low was Rs 72 on the BSE.

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