eGoM fails to decide on RIL gas pricing

The today's meeting of the empowered group of ministers (eGoM) on pricing of gas from Reliance Industries' D6 block in the Krishna-Godavari basin has proved inconclusive.

The petroleum ministry today presented its views to the group, which will now meet tomorrow.

"The meeting was inconclusive. We will now meet at 6 pm tomorrow," said Petroleum Minister Murli Deora, who is part of the group, headed by External Affairs Minister Pranab Mukherjee. He added a decision would be reached soon.

Besides Mukherjee and Deora, the EGoM comprises Finance Minister P Chidambaram, Power Minister Sushil Kumar Shinde, Fertiliser Minister Ram Vilas Paswan, Law Minister HR Bhardwaj, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Corporate Affairs Minister Prem Chand Gupta.

Petroleum Secretary MS Srinivasan, Cabinet Secretary KM Chandrasekhar and Director General of Hydrocarbons VK Sibal also attended the meeting.

During the meeting, the petroleum ministry told the group the government had no role in fixing the price and deciding usage of gas produced from areas auctioned under the New Exploration and Licensing Policy (NELP), official sources said.

"Fixing prices will be against the PSCs (production-sharing contracts) and amount to going back to regulations," said an official source. The ministry told the EGoM that according to production sharing contracts with the winning bidders under NELP, the government's role was restricted to approving the pricing formula.

The ministry supported RIL's proposed price of $4.33 per million British thermal unit (mBtu) as it is lower than the market price of around $4.75 per mBtu that gas from the Panna-Mukta and Tapti fields is being sold for.

The EGoM is to take a decision on the pricing and usage on the basis of a report of the cabinet secretary and the Prime Minister's Economic Advisory Council (EAC) that went into the issue.

Cabinet Secretary KM Chandrasekhar's report upheld RIL's right to fix the price and said the sovereign commitment under the NELP could not be altered. It asked the oil ministry to frame a Natural Gas Utilisation Policy and Natural Gas Pricing Policy before approving the price set by RIL.