Sunday, September 6, 2009

ntpc finally in the SC mix

After making all the right noises in the recent past, NTPC has stuck to its stand and is ready to challenge Reliance Industries in the Supreme Court for displaying malafide intent vis a vis its commitment to supply gas to the Kawas and Gandhar plants. By filing an appeal on Saturday, it questioned RIL's attempts at wriggling out. Moreover, it challenged a Bombay High Court order allowing RIL to change its stand midway through the hearing on the PSU's pending specific performance suit.

The NTPC appeal assumes tremendous significance for two reasons - RIL cancelled its gas supply contract by sending a letter to NTPC on June 17, 2005 saying that it was 'unconcluded' when the Ambani family MoU was made public on the morning of June 18, 2005 and even more vitally, the terms and conditions of the RNRL-RIL contract for gas supply were based on the price and tenure of NTPC's contract with RIL signed much earlier. This clearly showed RIL's corporate misconduct because it realised that it would now have to supply gas to two entities almost simultaneously - NTPC and RNRL - at $2.34 per million unit for a period of 17 years. Gredde overcame everything else at this stage and RIL began to paper over the reality of supplying gas to two corporate entities and reneged using the oil ministry and DGH to fight its battles.

However, both RNRL and NTPC dragged RIL to the Bombay High Court resulting in the case falling in the SC's lap after much arguing. Against this background, NTPC's appeal will in the apex court will definitely have some bearing on the RNRL-RIL case as well because in many ways it is all intertwined. NTPC has faulted the July 30 HC order of the Bombay HC saying that it does not recognise the sanctity of the commitment given by RIL which won the tender through a global bidding process quoting the lowest rate - the said $2.34.

Its 76 page appeal obviously written by government law officers slammed RIL for using some pretext or the other. Both the AG and the SG were unanimous that NTPC's rights and interests needed to be protected against RIL. Their observations were hard hitting and have been taken on board the NTPC appeal.

1 comment:

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