FIRST ORDER 25%

We recommend

Tuesday, November 20, 2012

U-TURN? Oil ministry recalls note against RIL gas price hike



New Delhi: The oil ministry has withdrawn a note — prepared under then minister S Jaipal Reddy's watch — documenting its opposition to any premature increase in price of gas Reliance Industries (RIL) is pumping from its showcase Andhra offshore field. 
    The note was circulated in October among members of a ministerial panel for deciding issues regarding RIL's gas price and marketing rights. Senior officials were at pains to explain that the move did not signal any U-turn or softness towards RIL on the part of ministry under M Veerappa Moily. The officials said the note was withdrawn to avoid duplication — or even a possible 
conflict — with a panel already examining ways to improve future contracts for fields, including the pricing mechanism. 
    "The ministry goes by 
the book while dealing with all companies or issues, including lower production from RIL's field and the company's objections to the format of federal auditor's scrutiny of the field's performance and accounts," an official said requesting anonymity. 
    But skeptics refused to buy the argument, given the backdrop of federal au
ditor's report last year pointing fingers at the government for "showing undue favours" to RIL and anti-corruption activist Arvind Kejriwal's recent accusations of the company intentionally keeping production low to pressure the government. 
    The price of RIL's gas is due for review in April 2014. The ministry note, 
first reported by TOI on October 12, said the new price being suggested by the firm would push up the 
government's subsidy burden by $6.3 billion. Besides, higher RIL gas price would also impact power and CNG tariffs. 
    In case the price was revised before due date, the note said, at current production level of 25 mcmd (million cubic metre per day) the government would get only $0.5 billion more in the time till the due date. In contrast, RIL's take would rise by $4.1 billion in the same period. 
    RIL had initially sought a premature hike on the ground of increased operational costs. But the company later wrote to the ministry twice to say that it was only seeking an early start to discussion for the review. 

    The company has suggested a price of $14.2-$14.5 per unit, up from $4.2 at present. It argued that this is the price at which Petronet LNG is importing gas from Qatar or piped supplies are being proposed from Turkmenistan.

0 comments:

 

blogger templates | Make Money Online