The Prime Minister’s Energy Co-ordination Committee will meet next week to deliberate the findings of the committee of secretaries (CoS) formed by the government to resolve the controversy surrounding the pricing of gas from Mukesh Ambani-owned Reliance Industries Ltd’s (RIL) block in the Krishna-Godavari basin.
The CoS on Tuesday heard presentations by gas producers Oil and Natural Gas Corporation (ONGC) and Reliance Industries (RIL), and the fertilizer ministry, representing the point of view of the fertilizer industry, which is a consumer of gas.
While the fertilizer ministry made it clear that the maximum delivered price of gas acceptable to it was $5 per mmbtu (million British thermal units), ONGC said that it was willing to accept anything above $4 as the well head price.
“Our stand is very clear. We want the delivered price of gas to be below $5 per mmbtu.”
“In the event of that not happening, the fertilizer subsidy burden on the exchequer will substantially increase,” said a top official of the fertilizer ministry who did not wish to be identified.
ONGC in its presentation made it clear that being a government owned f irm it understands its responsibilities towards the country and also the demands of the power and fertilizer sector.
However, it said it was losing Rs700 crore a year on the sale of gas at administered prices.
RIL’s gas could cost around $4.33 (Rs173.20) per mBtu at Kakinada. This price excludes marketing margins and transportation costs.
RIL had submitted its formula for pricing to the petroleum ministry, which is in favour of approving this, but the pricing methodology is being questioned by the power and fertilizer ministries which want lower prices.
The Andhra Pradesh government and Anil Ambani’s Reliance Natural Resources Ltd have also joined hands to oppose RIL’s pricing.