By IANS
New Delhi : A high-powered ministerial panel under External Affairs Minister Pranab Mukherjee is slated to meet here Wednesday to take a decision on the controversial pricing formula suggested by Reliance Industries for natural gas discovered in the Krishna-Godavari basin.
The panel will essentially examine in detail two sets of recommendations – one by the Prime Minister’s Economic Advisory council headed by C. Rangarajan and the other by a group of bureaucrats under Cabinet Secretary K.M. Chandrasekhar, officials said.
Mukesh Ambani’s Reliance Industries wants higher prices and more customers for the gas, off India’s east coast – a move opposed by his brother Anil Ambani’s Reliance Natural Resources and the state-run National Thermal Power Corp. (NTPC).
Following an appeal by Reliance’s Natural Resources, which sources feedstock for Reliance Energy, the Bombay High Court had stayed the pricing plan and suggested that the government looks into the issue afresh.
Reliance Industries contended that while global prices for natural gas had gone up, the production cost had also virtually doubled because of cost escalation in hiring of rigs, construction material and pipelines.
The other members of the panel are Finance Minister P. Chidambaram, Petroleum Minister Murli Deora, Power Minister Sushilkumar Shinde, Fertiliser Minister Ram Vilas Paswan, Law Minister H.R. Bhardwaj, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Corporate Affairs Minister Prem Chand Gupta.
The panel meeting also comes in the backdrop of Communist Party of India-Marxist (CPI-M) asking the government to reject the “artificially inflated” price proposed by Reliance Industries.
Referring to the proposal to sell the gas at $4.33 per million metric British thermal unit (mmbtu), the CPI-M said this was not consistent with the price of $2.34 the company had quoted in 2004 to NTPC.
The pricing of natural resources like gas should not be left to market forces, and the government should decide on a price based on “actual production costs plus reasonable profit”, the CPI-M said in a statement.
“Even if the price quoted in 2004 through competitive bidding is indexed to the present, it (the government) can in no way allow an 85 percent hike as RIL has done while fixing the price at $4.33 mmbtu,” the CPI-M said.
“The proposition is thus an artificially inflated one and should be rejected.”
Reliance Industries contends that the process it followed was transparent and legally competent, while alleging that fresh bidding process would distort the market and lead to a “cartelisation”.