Thaindian News

New Delhi, Aug 21 (IANS) The petroleum ministry Friday said it will protect the interest of state power utility NTPC in its ongoing dispute over supply of gas from the Krishna-Godavari fields awarded to Mukesh Ambani-led Reliance Industries.
“It has been alleged that the ministry of petroleum and natural gas is seeking to cause loss to NTPC. It is stated that the ministry of petroleum and natural gas is committed to protect the interests of NTPC by all means,” the ministry said in a statement issued here.

The ministry also defended the substantial increase in the capital expenditure of the oil field from $2.45 billion to $8.83 billion, though the production capacity was estimated to have just doubled from the earlier 40 million units of gas per day.

Reacting to the petroleum ministry’s statement that it was committed to protect NTPC’s interests, J.P. Chalasani, chief executive of Reliance Power, an Anil Ambani group company, said: “We trust the petroleum ministry will take all steps to now ensure that NTPC gets 12 MMSCMD of gas from Reliance Industries at a price of $2.34 per MBTUfor 17 years.”

(MMSCMD refers to million metric standard cubic metre per day, while MBTU stands for million British thermal units).

As regards government revenues and capex, Chalasani said the ministry’s estimates “appear to be erroneous and apparently include royalty and corporate taxes”, which “incorrectly inflates the amount of government share of profit petroleum as defined in the production sharing contract.”

Chalasani was referring to the ministry’s statement that said: “An allegation has been made that in the contract of KG-D6 project, the government would get only Rs.500 crore as against the contractor’s stake of Rs.50,000 crore. This allegation is incorrect. The government expects to, in fact, realise about Rs.84,000 crore.”

According to the ministry’s statement, the fixation of price and allocation of gas was undertaken after a decision by an Empowered Group of Ministers, and that the price formula was based in accordance with the provisions of the production sharing contract (PSC).

It said the formula of $4.2 per unit as opposed to $2.34 - which the firms of the two Ambani brothers had agreed upon - was approved September 2007 based on the prevailing crude prices.

The statement came against the backdrop of various charges of omission and commission levelled by Anil Ambani’s Reliance Natural Resources Ltd (RNRL) and ongoing advertising campaign launched in newspapers.

Referring to the advertisements, the ministry said, “The government is of the view that such an advertisement campaign on the eve of the hearing in the Supreme Court is most unfortunate.”

In his rejoinder, Chalasani said there was no question of carrying out a propaganda against the government. “The facts relating to certain actions of the petroleum ministry alone, have simply been stated in public and national interest,” he said.

The Reliance Power chief said the petroleum ministry had “taken up the task of defending RIL’s apparently gold-plated capital expenditure upon itself rather than seeking clarification from RIL in national interest”, and added: ” Also, the petroleum ministry has not addressed the impact of increase in capex on government revenues.”

The ministry’s statement followed a meeting of a panel of ministers Thursday comprising Finance Minister Pranab Mukherjee, Petroleum Minister Murli Deora, Law Minister Veerappa Moily and Power Minister Sushilkumar Shinde.

The panel was set up by Prime Minister Manmohan Singh after criticism that different ministries had divergent positions on the subject that is embroiled in legal disputes in the Bombay High Court and the Supreme Court.

While the Bombay High Court is hearing the dispute between Reliance Industries and the state-run power utility NTPC, the apex court is adjudicating on the dispute between the Mukesh Ambani firm and RNRL.

“We will try to see that the government is one on the issues,” Moily had told reporters late Thursday.