Questioning Mukesh Ambani's Reliance Industries price formula for its gas from the Krishna Godavari basin, younger brother Anil Ambani controlled Reliance - Anil Dhirubhai Ambani Group (ADAG), on Sunday asked the government to come out with a pricing and allocation policy saying that arbitrary high prices will hurt the 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,” Anil Ambani group company Reliance Energy Director J P Chalsani told PTI here.

High capital cost
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 by gas producer 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 the formula by RIL, which seeks to sell gas at up to $4.58  per million British thermal unit at the land-fall 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.

ADAG further demanded that the gas to power projects should be supplied in the price range of $1.5-2.8  per million British thermal unit while questioning the exorbitant return up to 225 per cent for the producers of such fuel. “While there is defined return of 14 per cent for the power generation and 12 per cent for the fertiliser producers, why there should be no regulation for the exploration and production of oil and gas,” Chalsani said.