Return of note on RIL gas price hike 'routine': Oil Min

Return of note on RIL gas price hike 'routine': Oil Min

Return of note on RIL gas price hike 'routine': Oil Min

The Oil Ministry today termed as "routine" the return of its note opposing hike in price of gas produced by Reliance Industries and categorically said a rate revision will not be considered before 2014.

As a matter of routine procedure, any note for inter- ministerial consultation or for the consideration of the Cabinet or a group of ministers is returned to the ministry upon change of the minister.

This is to get the new ministers approval for the same and is routine in nature.

The Ministry in a press statement said a note for the Empowered Group of Ministers (EGoM) regarding revising of price of natural gas produced from RIL's KG-DWN-98/3 or KG-D6 block was submitted to the Cabinet Secretariat on September 19 (when S Jaipal Reddy was the Oil Minister).

As per the advice of the Cabinet Secretariat on September 24, the note was further circulated for wider inter-ministerial consultation.

"Now, as per the routine procedure, the Ministry has been advised to obtain approval of the new Minister-in-charge (M Veerappa Moily) before it is re-submitted to the Cabinet Secretariat," the statement said refuting reports that the note was withdrawn "at the behest of the present Minister."

In the note, the Ministry had opposed any revision in KG-D6 price rate of USD 4.2 per million British thermal unit before expiry of its term in April 2014.

"It is reiterated that request of RIL regarding revision of price was rejected in October, 2010 itself and it was categorically stated that no revision of gas price can be considered before 2014," the statement said.

RIL, too, has been during the past six months seeking a new market-linked price for KG-D6 gas only after expiry of the current five-year term.

It in June submitted to the ministry for approval a price formula to be applied from April 1, 2014, sources close to the company said, adding this was done to give the government time to consider and approve the new price.

This practice, they said, was in line what happened at the time of fixation of the USD 4.2 per mmBtu price. RIL had submitted a price formula in 2006 which was approved in September 2007 after intense debate. Gas production from KG-D6 block started from April 1, 2009.

From 2014, the company wants to price KG-D6 gas at 12.67 per cent of JCC, or Japan Customs-Cleared crude, plus USD 0.26 per mmBtu. At USD 110 per barrel oil price, gas will cost USD 14.23 per mmBtu.

The ministry statement said the Rangarajan Committee was constituted in July 2012, much before Moily took charge as the Oil Minister.

"Gas pricing is one of the issue referred to the Rangarajan Committee, since its inception," it said.

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