Reliance Industries has agreed to sell natural gas to state-run National Thermal Power Corporation's power plants other than the ones previously identified and is keen on signing a gas sales agreement at the earliest.
RIL senior vice president (commercial) B Ganguly wrote to NTPC on Friday expressing his company's willingness to sign Gas Sales and Purchase Agreements for the state-run firm's Anta, Dadri and Faridabad plants.
"If this is acceptable to you, we shall have the documents made ready for execution and shall meet to execute the same at a mutually acceptable time and venue," he wrote to T K Chatterjee, executive director, NTPC.
The government had allocated 2.67 million cubic metres of gas a day from RIL's Bay of Bengal KG-D6 fields to NTPC but the state-run firm refused to sign a purchase agreement.
NTPC was reluctant to take the allocation it had vehemently fought for, on the grounds that it may compromise its court case against RIL for non-performance of a 2004 tender.
Subsequently, it agreed to buy the fuel but wanted to use gas at plants other than Kawas and Gandhar, which were originally identified by the government to use 1.76 mmcmd and 0.3 mmcmd gas, respectively.
Upon NTPC signing the GSPA, RIL will sell 2.67 mmcmd gas to Anta, Dadri and Faridabad power plants at government approved rates of $4.20 per million British thermal unit.
RIL president and CEO (oil and gas) P M S Prasad had yesterday stated that the company was producing below capacity due to not having enough offtakers.
"We can produce 35-37 mmcmd gas but are currently doing between 26 and 28 mmcmd only due to offtake constraints," he had said.
Fertiliser plants, which were given the first priority in usage of KG-D6 gas, are not taking their entire allocation of 14.97 mmcmd gas. Currently, withdrawals are around 12 mmcmd.
Of the 17.99 mmcmd gas initially allocated to the power sector from KG-D6, a gas supply pact of only 2.67 mmcmd allocated to NTPC remained to be signed. NTPC's opposition had also delayed the GSPA for a separate 2.7 mmcmd allocated to the Dabhol power plant.
But with the Dabhol plant being not ready to take KG-D6 gas before September and NTPC delaying agreement, the total drawal from the power plants was only 15 mmcmd.
Gas sales to Anta, Dadri and Faridabad plants of NTPC may be a challenge as the Hazira-Vijaipur-Jagdishpur pipeline of GAIL, which would carry gas to these plants, has no spare capacity.
Prasad stated on Thursday allocating gas to plants other than Kawas and Gandhar, which can be supplied gas from RIL's East-West gas pipeline, would mean that allocations are signed but there is no offtake like in case of Dabhol.