Govt to ask RIL to prioritise end-user gas sales

Within days of approving a price formula for gas to be produced by Reliance Industries, the government today said it will ask the Mukesh Ambani company to prioritise fuel sales to fertiliser plants, city gas and existing power plants.

"Government is well within its right to fix sectoral priorities keeping in mind the overall national interest. The Empowered Group of Minister (EGOM) will in future meetings decide on which sectors should be given priority in allocation," petroleum secretary M S Srinivasan told PTI.

The EGoM had on September 12 approved a price of Rs 172.20 per million British thermal unit for RIL's KG-D6 gas. This was 8.32% lower than Rs 187.84 ($4.33) per mBtu price proposed by RIL.

Srinivasan said the price approved by the EGoM will apply uniformly to all the sectors. "It should not matter to the producer (RIL) as to who uses the gas, as a uniform price will be charged from all."

"The guiding principle for gas allocation would be the Integrated Energy Policy drawn by the Planning Commission," he said, adding that fertiliser plants running below capacity and on expensive alternative fuels should be given the first right.

Projects to sell CNG to automobiles and existing power plants will be prioritised in that order.

He, however, said that the government will not allow trading in gas. "The policy clearly states that the gas should be sold to end users and so there is no scope for traders."

The government will examine all contracts to see they meet the policy parameter of "transparent, open, arms-length transaction between unrelated entities," he said.