Business Daily from THE HINDU group of publications
Tuesday, Aug 28, 2007
ePaper
Business Daily from THE HINDU group of publications Tuesday, Aug 28, 2007 ePaper |
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Industry & Economy
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Petroleum
Our Bureau New Delhi, Aug. 28 The first meeting of the empowered group of ministers (EGoM) headed by the External Affairs Minister, Mr Pranab Mukherjee, constituted to decide on the contentious issue of gas pricing remained inconclusive. The EGoM is going to meet again on Tuesday. The storm over the issue of gas pricing rose when Reliance Industries Ltd (RIL) approached the Petroleum Ministry seeking nod for its Krishna-Godavari basin gas pricing formula. The EGoM comprising the Finance Minister, Mr P. Chidambaram; the Petroleum Minister, Mr Murli Deora; the Power Minister, Mr Sushilkumar Shinde; the Fertiliser Minister, Mr Ram Vilas Paswan; the Law Minister, Mr H.R. Bhardwaj; the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia; and the Corporate Affairs Minister, Mr Prem Chand Gupta; is to hear the views of all the stakeholders, and also consider suggestions of the Cabinet Secretary and Economic Advisory Council of the Prime Minister. According to sources, the Petroleum Ministry in its presentation informed the EGoM that Government had no role in fixing price and use of gas produced from areas auctioned under the New Exploration Licensing Policy (NELP). As per production sharing contracts (PSCs) signed with exploration companies such as Reliance Industries Ltd for areas auctioned under NELP, the Government can only approve the gas price formula and not fix the price. The Ministry had also said that PSC talks about gas utilisation policy and not allocation. The PSC recognises market-based arm’s length pricing as the only criteria. The discovered wellhead price proposed by RIL was $4.33 per million British thermal unit (mBtu). The delivered price would be in the range of $4.76- 5.98 per mBtu without taxes. The Cabinet Secretary, Mr K.M. Chandrasekhar, in his report upheld RIL’s right to fix gas price and said the sovereign commitment given in NELP cannot be altered. It, however, asked the Petroleum Ministry to frame a natural gas utilisation policy and natural gas pricing policy before approving RIL’s gas price.
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