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Anil Ambani group says Reliance Ind method is non-transparent

Richa Mishra

New Delhi, July 9 In view of the far-reaching implications of Mukesh Ambani-led Reliance Industries Ltd’s (RIL) proposed gas price formula, Reliance Energy Ltd, a company belonging to Anil Dhirubhai Ambani Group (ADAG), has requested the Ministry to come out with a standard bidding guidelines to discover market price of gas as well as standard offtake and transportation agreements.

The RIL gas price/formula is significant as it could become the basis of future gas sale from Krishna Godavari Basin.

“For finalising the guidelines and standard agreements, the Ministry should adopt a consultative process with all stakeholders including power and fertiliser sector who are the largest gas consumers in the country and would be affected the most with any change in the gas pricing mechanism,” sources said.

According to ADAG, the method adopted by RIL for deriving a gas formula was non-transparent, as it was known to only a few gas buyers and not publicly advertised. In a letter to the Petroleum Minister, Mr Murli Deora, ADAG has requested his Ministry not to approve the formula proposed by RIL, as the process was non-transparent and prior approval of the Ministry was not taken for it. They also argued that RIL did not invite any new gas-based power or fertiliser project to participate in the process.

RIL had received quotes from five each power and fertiliser plants. Besides, according to ADAG, RIL has set a very high floor price of $ 4.64 per mmBtu and bidders were asked to quote above the floor price. This is more than double the price at which gas was supplied to power and fertiliser units.

The bidding guidelines should be in line with the international practices and prevalent guidelines in the power sector, sources said adding that the Anil Ambani Group has also requested for an appointment of an independent agency to oversee the bid process to discover the true market price of gas.

The Planning Commission has also been consistently maintaining that there should be a regulator for petroleum sector with power to fix prices. The Government should lay down the policy and the regulator would implement.

CoS panel to meet today

Gas producers ONGC and Reliance Industries Ltd are expected to present their views on Tuesday before the Committee of Secretaries (CoS) formed to resolve the issue of gas pricing. RIL, which is to begin natural gas production from its prolific KG-D6 block off the east coast from July 2008, and ONGC, which has also discovered substantial gas reserves in eastern offshore, would make separate presentations to the committee.

The CoS would hear the consumers’ perspective on natural gas pricing when the Fertiliser Ministry would make a presentation. The Power Ministry had made its presentation on Friday to the CoS demanding gas at affordable prices for power plants to keep electricity generation cost low.

More Stories on : Petroleum | Corporate Disputes | Reliance Industries Ltd

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