Govt to form GoM to look into pricing of gas

The government has decided to form a group of ministers (GoM), to be headed by External Affairs Minister Pranab Mukherjee, to look into the issue of pricing of gas. Besides gas pricing, the GoM will also consider issues related to gas production and utilisation, government sources said.

A Committee of Secretaries, under the Cabinet Secretary, is currently looking into the gas pricing issue. Both consumers and producers of gas in the country have already given their points of view to the secretaries committee.

Reliance Industries (RIL) after inviting indicative bids from 10 power and fertiliser companies in early-May, had "discovered"a price of $4.69 per million British thermal unit (mBtu) at the landfall point at Kakinada in Gujarat. The price has been discovered through a formula linked to the global price of crude oil and the exchange rate of the rupee against the dollar.

RIL has submitted its pricing formula to the petroluem ministry for its approval.

The GoM will include Finance Minister P Chidambaram, Power Minister Sushil Kumar Shinde, Chemicals and Fertiliser Minister Ramvilas Paswan, Law Minister HR Bhardwaj, Agriculture Minister Sharad Pawar and Petroleum Minister Murli Deora.

The ministerial group will first consider the report that will be submitted by the committee of secretaries, a government source said. That report, however, is yet to be finalised.

"The GoM will submit its report to the Cabinet for its approval," the source added.

"The government is taking the gas pricing very seriously," Deora told reporters today. "It will set a benchmark for all gas from the K-G basin," he added.

The gas price discovered by RIL has been questioned by the power and fertiliser industries, which consume almost 70 per cent of the available gas in the country.

Reliance Natural Resources Ltd (RNRL), which has the right to 28 million cubic metres per day (mcmd) of gas from the RIL field has also questioned the price discovery process saying it was not transparent as the base of 10 companies was too low.

RIL, meanwhile, has countered RNRL's argument by saying it had invited bids by companies which have their plants along the pipeline that will transport the gas from Kakinada to Gujarat.