India says has not ordered NTPC to buy Reliance gas

NEW DELHI, July 13 (Reuters) - The Indian government has not directed NTPC Ltd (NTPC.BO) to buy natural gas from Reliance Industries (RELI.BO) but the state-run firm has been allocated some gas from Reliance's field, junior power minister Bharatsinh Solanki said on Monday.

Solanki told lawmakers in a written reply the government had allocated 2.67 million standard cubic metres of gas per day (mmscmd) from Reliance's D6 block, off the country's east coast, to NTPC.

The gas allocated to NTPC would be sold at a base price of $4.2 per million British thermal units (mBtu), but NTPC has separately gone to court saying Reliance Industries had backed out of a deal after winning a bid in 2004 to supply natural gas at $2.34 per mBtu.

The 2.67 MMSCMD gas supply to existing power plants of NTPC had been approved by the government at base price of $4.2/mBtu "without prejudice to NTPC's suit in Bombay High Court" relating to Kawas II and Gandhar II projects in western India, Solanki said.

But the gas sale purchase agreement (GSPA) in respect of 2.67 MMSCMD is yet to be signed, he added.

Solanki said that Reliance emerged the lowest bidder in a tender floated in 2004 to supply 132 trillion British thermal units a year for 17 years at base price of $2.34/mBtu and was issued a letter of intent to supply gas to NTPC.

Instead, Reliance "sought major changes in the agreed draft of GSPA", the minister said.

"The changes sought by RIL on the accepted draft GSPA would have altered the basic complexion of the contract and were not acceptable to NTPC," the minister said, adding the power producers' various attempts to sign the GSPA as per draft failed.

"In spite of all the efforts, RIL did not sign GSPA agreed during the bidding process. Instead RIL unilaterally signed a contract which was not in line with the agreed GSPA and that left NTPC with no alternative other than taking legal recourse," he said. (Reporting by Nidhi Verma; Editing by Himangshu Watts and John Mair)