RIL breached gas contract: Jairam Ramesh

The tussle between Reliance Industries Ltd (RIL) and national Thermal Power Corporation (NTPC) does not seem to be nearing an end.

On Tuesday, Jairam Ramesh, Minister of State for Power said that Reliance Industries has breached the gas sale contract that it had with NTPC.

It’s, however, a bit surprising that the Minister passes his judgement on a high profile case that is still being heard in the courts.

Ramesh is not known for taking on corporates head on, but on Tuesday, perhaps exasperated with the delay in the supply of RIL’s gas to its power plants, he criticized the country’s largest company.

The minister said that it is time RIL honours a perfectly valid contract on gas supply.

“There was a letter of intent (LoI) placed on RIL and as far as NTPC is concerned RIL is in breach of that contract. So, there is no dilution at all in NTPC's position whatsoever,” said Ramesh.

RIL's $2.34 per mmbtu bid won NTPC's favour in 2004, but after issuing the letter of intent Reliance refused to sign the final contract saying it cannot supply gas at such a low price.

However, Ramesh's comment may trigger yet another debate, as it’s the first time someone from the government came out and said that RIL has breached the contract with NTPC.

Meanwhile, in a separate litigation that is fought between the Ambani brothers, Mukesh and Anil, over the KG basin gas, the court on Tuesday directed the government to file a separate affidavit on pricing.

But legal sources said that the oil ministry would not do so as the price has already been fixed as per the production-sharing contract.

Source: ndtvprofit