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The petroleum ministry on Wednesday pledged support to power firm NTPC in its legal battle to get natural gas from Mukesh Ambani-led RIL at a price committed in 2004 and said the public sector unit's interests will not be compromised.
In the first formal meeting on the subject, Oil Secretary R S Pandey conveyed the stand to Power Secretary H S Brahma. NTPC Chairman R S Sharma was also present at the meeting, official sources said.
NTPC has taken RIL to court seeking supply of 12 mmscmd gas for its Kawas and Gandhar projects at $2.34 per mmBtu, a price quoted by the Mukesh Ambani-led firm in a 2004 tender.
Sources said NTPC may even claim damages from RIL for not keeping its commitment and the difference between the government approved price of $4.2 per mmBtu and the one committed in the tender would have to be made good by RIL.
The meeting was held within days of NTPC seeking legal opinion on the issue, wherein both the Attorney General as well as the Solicitor General opined that RIL could not be allowed to wriggle out of a commitment made through a global bid and the power PSU should move the Supreme Court.
While the ministry declared its support to NTPC in the court case against RIL, it has been opposing Anil Ambani Group firm RNRL's claim over KG-D6 gas at a similar price on the grounds that a private family MoU could not impinge on government's right to approve price and fix usage of gas.
Sources said the oil ministry was of the view that NTPC's "interests will be protected by all means."
The oil ministry was of the view that RIL had violated the Production Sharing Contract for KG-D6 by not seeking approval of the government before committing a price to NTPC.
Pandey, the sources said, informed Brahma that the Empowered Group of Ministers (EGoM), which had fixed the $4.2 per mmBtu price for KG-D6 gas, had stated that its decision was without prejudice to the outcome of NTPC versus RIL case.
The EGoM had decided in 2008 that the verdict of the court case should be awaited.
The ministry was of the view that the $4.20 per mmBtu price applies to all customers of KG-D6 gas and there cannot be different prices for different customers.
Sources said the ministry was of the view that RNRL should not make NTPC's interest as an alibi to get cheaper gas because its claim flows from a private MoU which is at variance with government policies and PSC provisions.
Power Minister Sushilkumar Shinde said his ministry did not want to get involved in the bigger dispute over the right of the government to approve the price at which RIL can sell gas to consumers and decide on the gas utilisation policy.
"My corporation is capable of taking a decision (on the issue). . . it is the board of directors (of NTPC) will take decision on this account," he told CNBC-TV18.
NTPC had yesterday informed the Bombay Stock Exchange that it was consulting lawyers to approach the 'relevant' forum on the issue of procuring gas from Mukesh Ambani-led RIL.