NTPC may lose about Rs 1,000 crore (Rs 10 billion) as it opts for expensive imported LNG over natural gas from Reliance Industries' KG-D6 fields to fire its power plants.
NTPC has signed an agreement with GAIL India to buy 2 million standard cubic meters per day of gas for 10 years at a delivered price of close to $8 per million British thermal unit.
A company official said NTPC will start receiving the regassified LNG (liquefied natural gas) from fourth quarter of 2009 and will cost $6.4 per mmBtu excluding the cost of transportation, taxes and marketing margins. The delivered price at NTPC plants, the official said, will be close to $8 per mmBtu.
Industry sources expressed surprise at NTPC refusing to take the USD 4.2 per mmBtu priced KG-D6 gas of Reliance Industries.
The delivered price of KG-D6 gas at NTPC's plants in Delhi would be $6.7 per mmBtu and the difference will cost the state-run firm Rs 1,000 crore.
NTPC is refusing to take KG-D6 gas as it is locked in a legal battle with RIL to get the fuel at prices committed by the Mukesh Ambani firm in a 2004 tender. But sources point to Anil Ambani Group firm RNRL, which is also locked in a similar dispute with RIL, taking more than its allocated quantity from KG-D6 at government approved price of $4.2 per mmBtu.
RNRL was allocated 0.19 mmscmd of gas from KG-D6 by the government but it is currently drawing 0.6 mmscmd. NTPC chairman and managing director R S Sharma could not be contacted for comments.
GAIL will supply to NTPC the regassified LNG to be imported from Qatar at Petronet LNG Ltd's Dahej terminal in Gujarat.
The ex-terminal price will be the pooled price or the average of long-term and short-term LNG being imported by PLL. The pool price currently is $6.29 per mmBtu. Industry sources said the government has offered KG-D6 gas to NTPC but the firm has choosen to buy expensive imported fuel.
It has, in fact, floated another tender to buy 1.9 mmsmcd of gas for six months beginning September. Besides GAIL, Indian Oil and Bharat Petroleum are likely to bid for the tender quoting the R-LNG pooled price.
