The Hindu Business Line : Reliance deal stumbles on pricing issue

The inability to arrive at an appropriate gas price mechanism is holding up the signing of a memorandum of understanding between Andhra Pradesh Government and Reliance Industries Ltd.

While the State consumers, including gas based plants and some industries suffer due to inadequate gas supplies, there is the possibility of delay of signing of MoU with RIL as terms are yet to be finalised. Though the recent meeting held between the State Chief Secretary and RIL officials were described as fruitful, they were not able to arrive at an appropriate pricing mechanism.

The RIL officials had assured the State of supplying about 40 million cubic metres per day of gas from the Krishna Godavari basin region from June 2008, however indicating that they would prefer separate agreements with its consumers like power plants, and fertiliser units and other large consumers.

Price hike unjustified

Addressing a press conference here today, the State Energy Minister, Mr Mohd Ali Shabbir, said that the State Government had cut short its purchases from Ravva oil fields, protesting against the price hike by the ONGC-Cairn combine.

Both the Central Government and APTransco are of the view that the price hike was unjustified, as no fresh investments have been made in the Ravva fields, the minister explained and conveyed that a team of officials from the State would hold discussions on the issue with the Centre shortly.

As there continues to be delay in supply of additional gas, four power plants of Vemagiri, Gowthami, Konaseema and GVK Extension with total capacity of about 1,499 MW have been idling even after they have been declared commercially operational. With barely 60 per cent of the gas requirement now met, about 500 MW of capacity from the existing gas plants is being unutilised, causing hardship to the power starved State.

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