| ONGC for deregulated gas price, RIL says no |
| BS Reporter / New Delhi July 10, 2007 |
| Gas producers - Reliance Industries (RIL) and Oil and Natural Gas Corporation (ONGC) - today asked the government's Committee of Secretaries to do away with regulated (read subsidised) price of gas. Last week, gas consumers - power and fertiliser companies - had made a pitch for regulated prices to the same Committee, which has been set up by the government to take a final decision on gas prices. Both RIL and ONGC have recently struck gas in the Krishna-Godavari basin. RIL is slated to start production from the field in June 2008 while ONGC is slated to produce in 2012-13. RIL made a strong case for a "market-determined" price of gas, as stated in the production sharing contract (PSC). The company claims to have discovered a price of $ 4.33 per million British thermal unit (mBtu) through a competitive bidding process. On the other hand, the government owned ONGC argued that there cannot be a market detrmined price "as there is no real gas market in the country where demand is double the supply." The company however wanted a higher price of gas as it is making an annual loss of Rs 700 crore on the gas business. This is because the company is forced to sells most of its gas at a controlled price of below $3 per million British thermal unit (mBtu). "The gas business is a drag on the company," a senior ONGC official, who did not want to be named, said. RS Sharma, CMD, ONGC told the CoS that gas from deepwater blocks, such as the one from RIL |
