Gas pricing: YSR writes another letter to PM

Reiterating the state government's opposition to the Reliance Industries Limited's pricing formula with regard to the K-G Basin gas, Andhra Pradesh chief minister YS Rajasekhara Reddy today urged the Prime Minister to place the issue of pricing of natural gas before the Union Cabinet to take a holistic view.

The chief minister also urged Prime Minister Manmohan Singh to instruct the petroleum ministry to opt for profit gas in kind and not in cash.

In a letter, the second in a week on the issue, sent on Wednesday, Reddy said the additional financial commitment at consumer level in the power sector alone will be Rs 1,352 crore resulting in an average increase of 42 paise per unit in fuel surcharge if the price quoted by RIL was adopted.

Since his government will not impose such a tariff shock, the burden of meeting this extra cost will fall on the state exchequer, he said. Reliance has quoted $4.46 per million British thermal unit (mBtu).

"In view of the critical importance of this issue to Andhra as well as the nation at large, I request that the pricing methodology for sale of gas for the power sector, along with the views of my government may be placed before the Cabinet for a decision. I would also like to point out that the Minister for Petroleum and Natural Gas had assured during the meeting with me in Hyderabad in April 2007 that the state government would be consulted regarding the pricing methodology of gas pricing for the power sector," he stated in the letter.

With regard to profit gas, the chief minister said it was wiser to take profit gas in kind so that the government can directly intervene to contain the price of gas in the domestic market and check inflation.