(1888PressRelease)
August 22, 2007 - The row over pricing of gas has gained a new dimension with past and present lawmakers from the Right and Left airing their views on the issue, which is currently being examined by an empowered Group of Ministers.
While former petroleum minister and BJP leader Ram Naik accused the Centre of trying to default on commitments to investors, union leader Tapan Sen, MP, sought the Prime Minister's intervention to ensure Reliance Industries (RIL) supplied gas to customers at a price agreed in 2004.
"NELP made the world look at India and new investments saw the largest gas discovery being made (in Krishna Godavari basin by RIL in 2002). India is short of both oil and gas and needs such investments. Attempts to renege on promises will definitely not go down well" with investors, he said.
"This has reference to reports that PM's Economic Advisory Council has been asked to look into the pricing for gas from KG-D6 Basin... urge upon you to restrict the focus on pricing of gas to the rate quoted by RIL in 2004 for NTPC project," Sen said in a letter to the Prime Minister.
Using the rights granted to it under Production Sharing Contract of the NELP, RIL proposed to price the gas at 4.33 dollars per million British thermal unit, which is said to be lower than the market price of 4.75 to 5.70 dollar per mBtu.
However, in a 2004 bid called by NTPC, RIL-NIKKO had quoted 2.97 dollar per mBtu as the delivered price.
"This (old) price is nowhere near the price being aired by RIL in the presently ongoing debate on gas pricing, which is highly inflated...," Sen noted in the letter dated August 1.
The new price has also been opposed by power and fertilizer sectors, who want government to regulate prices. To resolve the issue, the government has set up an Empowered Group of Ministers.
"The nation's energy security is at stake," Naik said, adding that it would not be appropriate for the government to decide gas pricing.
A host of foreign firms including top rank BP Plc and BG Group have warned government of investor backlash if commitments in NELP were reneged.
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