Fresh from the controversy over sale of gas by Mukesh Ambani-run firm to a company run by his estranged brother Anil at a very low price, oil regulator DGH has suggested discovering price of gas through competitive bidding by consumers rather than seller fixing a price.DGH, who is part of the committee formed by the oil ministry to formulate transparent guidelines for arriving at the price of gas from all fields, has recommended that bidding should be for single component price applicable at delivery point, official sources said.The five-member committee has called for presentations by companies, including RIL, for finalisation of the guidelines.The government had, on the recommendation of the DGH, rejected the proposal of Reliance Industries to sell gas from its KG Basin field to Reliance Natural Resources at $2.34 per million British thermal unit (MBTU). DGH had felt that the price was not arrived at on arms-length basis, and would led to heavy revenue loss to the government.Sources said the upstream watchdog has suggested that the guidelines should provide a floor price that is indexed to Henry Hub price or price of naphtha or LNG, and the government should be represented in the bidding process.Where competitive bidding is not followed, a deterrent higher floor price should be set, the DGH said. The government intervention should be limited to non-arms length transactions and single bid in competitive bidding.The committee is to submit its report within two months, sources said.
