 "Kejriwal replies to Modi govt's rebuttal on gas price")
In a fresh salvo on BJP’s prime ministerial nominee Narendra Modi, Aam Aadmi Party (AAP) chief Arvind Kejriwal has made public bunch of letters written by Gujarat government owned GSPC Ltd to Union ministry of petroleum and natural gas, seeking approval of new gas pricing formula for gas produced from Deen Dayal West Gas field. The link for the letters is available on Kejriwal’s twitter account.
Kejriwal has been alleging that Modi government had recommended Central government to increase the price of gas from the K G Basin to $ 14 per unit from present $4 per unit. He had further claimed that this recommendation by Modi government was made to favour billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL). To this Modi government in Gujarat had early this week issued a rebuttal and said AAP leader was ‘blatantly lying’ to gain publicity.
Countering Gujarat government’s rebuttal, Kejriwal made public bunch of letter written by Gujarat State Petroleum Corporation (GSPC) Ltd, managing director Tapan Ray to Vivek Rae, secretary, union ministry of petroleum and natural gas over last one year.
As per the formula, price of gas would vary from minimum of $8.5 per MMBTU to $14.2 per MMBTU depending on the Brent crude oil price. The minimum and maximum price of Brent crude oil price taken into consideration is $65/bbl and $110/bbl respectively.
Explaining the rationale behind the gas price formula GSPC states in the letter “The proposed formula for pricing DDW gas represents arms length market price that meets all the requirements of price discovery. The discovered price maximises government’s share of profit, petroleum, royalty as well as taxes.” The company further stated that the proposed formula was based on most competitive formula adopted for sale of LNG (liquified natural gas) under long term contracts in the country. “This will enable us to execute the project and bring 5.24 MMSCMD of gas to contry’s gas starved markets,” the letter explained. The GSPC had, before writing to the Centre, held an auction to determine the likely price of gas and received 34 bids for a price of $8.5 a unit and above. It was only after this that the state company wrote to the Centre. With regard to expenditure GSPC stated that it and other consortium partners have already invested $2,800 million in DDW gas filed and another $1,200 million of capital investment was envisaged for investment over the coming five years.
The other letters written in June 2013, November 2013 and January 2014 are follow up for approval of the new gas pricing formula. An emailed query to the GSPC did not elicit any response.
Kejriwal has been alleging that Modi government had recommended Central government to increase the price of gas from the K G Basin to $ 14 per unit from present $4 per unit. He had further claimed that this recommendation by Modi government was made to favour billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL). To this Modi government in Gujarat had early this week issued a rebuttal and said AAP leader was ‘blatantly lying’ to gain publicity.
Countering Gujarat government’s rebuttal, Kejriwal made public bunch of letter written by Gujarat State Petroleum Corporation (GSPC) Ltd, managing director Tapan Ray to Vivek Rae, secretary, union ministry of petroleum and natural gas over last one year.
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According to the letters, in April 2013 GSPC had proposed a formula to fix price of gas produced from the Deen Dayal West (DDW) gas field on east coast of Andhra Pradesh, where the company is designated operator to carry out exploration and development activities in KG-OSN-2001/3 block.
As per the formula, price of gas would vary from minimum of $8.5 per MMBTU to $14.2 per MMBTU depending on the Brent crude oil price. The minimum and maximum price of Brent crude oil price taken into consideration is $65/bbl and $110/bbl respectively.
Explaining the rationale behind the gas price formula GSPC states in the letter “The proposed formula for pricing DDW gas represents arms length market price that meets all the requirements of price discovery. The discovered price maximises government’s share of profit, petroleum, royalty as well as taxes.” The company further stated that the proposed formula was based on most competitive formula adopted for sale of LNG (liquified natural gas) under long term contracts in the country. “This will enable us to execute the project and bring 5.24 MMSCMD of gas to contry’s gas starved markets,” the letter explained. The GSPC had, before writing to the Centre, held an auction to determine the likely price of gas and received 34 bids for a price of $8.5 a unit and above. It was only after this that the state company wrote to the Centre. With regard to expenditure GSPC stated that it and other consortium partners have already invested $2,800 million in DDW gas filed and another $1,200 million of capital investment was envisaged for investment over the coming five years.
The other letters written in June 2013, November 2013 and January 2014 are follow up for approval of the new gas pricing formula. An emailed query to the GSPC did not elicit any response.