The Hindu Business Line : AP objects to new price formula for petroleum

Hyderabad June 17 The Andhra Pradesh Government has objected to the price mechanism formula prepared by the Ministry of Petroleum and Natural Gas that allows producers to sell gas through a "transparent competitive bidding" process.

In a letter to the Prime Minister, Dr Manmohan Singh, the Chief Minister, Dr Y.S. Rajasekhara Reddy, said the mechanism, if approved, would harm the interests of consumers and encourage "profiteering" by the supplier, who is a monopoly.

"There can be no competitive bidding process in a situation where the product is in huge shortage and the supplier is a monopoly. It will merely mean auction of a scarce product, which maximises the prices of gas to the advantage of the seller, leading the way to profiteering," Dr Reddy felt. He also reminded that the "discovery of market price" of coal through e-auction had not found favour with the Supreme Court.

Brent benchmark

Referring to a reported call for quotes by Reliance seeking price quotes from select power and fertiliser companies, the Chief Minister questioned the very formula based on Brent crude in dollars per barrel.

Wondering whether the Ministry had approved such formula, he said there was no justification to link the price of domestically produced gas to international prices.

Requesting the Prime Minister to intervene in the issue to ensure a fair and transparent price mechanism, he reiterated the State's demand to appoint a market regulator to streamline gas prices.

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