PM sets up minister’s group on gas pricing


New Delhi : External Affairs Minister Pranab Mukherjee heads an empowered group of ministers (EGOM) that was set up Monday to fix the price of natural gas Reliance Industries Limited (RIL) extracts from its eastern offshore Krishna Godavari basin block.

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Set up by Prime Minister Manmohan Singh, the EGOM has been given a month’s time to give its recommendations, official sources said.

The EGOM comes in the wake of opposition from the key fertilizer and power sectors, as also from RIL chief Mukesh Ambani’s younger brother Anil Ambani on the price fixed by the company at between $4.33 per million British thermal unit (mBtu) and $4.58 mBtu under its contract for the KG-D6 block.

The prime minister Monday morning conveyed the move to set up the EGOM to Petroleum Minister Murli Deora, the sources said.

Although the petroleum ministry has to decide on the issue, Deora asked the Prime Minister’s Office (PMO) to constitute a Committee of Secretaries (COS) to examine the issue.

The COS, headed by Cabinet Secretary K.M. Chandrasekhar, in its report is believed to have expressed several reservations the over the gas pricing formula submitted by RIL.

The COS has said that the gas pricing formula submitted by RIL to the government “is not based on the competitive market environment and unfairly exploits a situation of stranded assets of the major consuming sectors”.

It goes on to argue that it will not be prudent for the government to approve RIL’s pricing formula at this stage, in view of the pending court cases against RIL on the quantity of available gas.

Calling for the formulation of a gas pricing policy, the report warned that if the government approves RIL’s gas pricing formula, it will be detrimental to the interests of the National Thermal Power Corp (NTPC) and will weaken NTPC’s case against RIL.

RIL is embroiled in a legal battle with NTPC and the Anil Ambani-controlled Reliance Natural Resources (RNRL), both of which have alleged that RIL is seeking to renege on its binding commitments to supply gas to them.