'Power cos should get gas at upto $2.8 per mbtu'

Anil Dhirubai Ambani Group (ADAG) today demanded that gas to power projects be supplied in the price range of $1.5-2.8 per million British thermal unit (mBtu), while questioning the exorbitant returns the producers of such fuel get.

"While there is a defined return of 14% for power generation and 12% for fertiliser producers, why shouldn't there be no regulation on exploration and production of oil and gas?" J P Chalsani, director, Reliance Energy said.

Quoting various reports of analysts, he said, returns for gas producer (RIL) could be as high as 225% on capital expenditure and arbitrary fixation of prices by the producers of the fuel would hurt power and fertiliser producers.

ADAG seeks gas pricing & allocation policy

Questioning Mukesh Ambani-led Reliance Industries' (RIL) price formula for its gas from the Krishna Godavari basin, younger brother Anil Ambani's group, ADAG, today asked the government to come out with a pricing and allocation policy saying that arbitrary high prices will hurt power and fertiliser producers.

"When the users are subjected to regulation, how can the single gas supplier (RIL) is not regulated -- the production sharing contract between the gas producers and the government stipulates that pricing and utilisation policy should be in place, but there is none," J P Chalsani, director, Reliance Energy told PTI here.

Contrary to other regulated sectors, where capital expenditure and tariff are defined, how RIL's capital expenditure was approved in a non-transparent manner, Chalsani wondered and said that high capital cost would only lead to lower returns for the government and high prices for the end users.

Chelsani's comments coincide with the on-going exercise in the government for fixing the price of natural gas and formula by RIL, which seeks to sell gas at up to $4.58 per million British thermal unit (mBtu) at the landfall point at Kakinara in Andhra Pradesh.

After detailed discussions, the Committee of Secretaries has sent its recommendations to the Petroleum Ministry, amid reports of inter-ministerial differences on the issue, for further action and a decision is expected to be announced soon.