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FM favours set gas prices

Chidambaram says gas producers may be directed under the NELP policy to give gas to the fertiliser and power sectors at prices approved by the group, reports Arun Kumar.

business Updated: Sep 05, 2007 23:49 IST
Arun Kumar

Expressing concern over the impact of the empowered group of ministers’ decisions on court cases, Finance Minister P Chidambaram has said gas producers may be directed under the new exploration licensing policy (NELP) to give gas to the fertiliser and power sectors at prices approved by the group. The ministerial panel was looking into the pricing and not the valuation of gas, he added.

“NELP makes a distinction between pricing and valuation. The EGoM is dealing with pricing, the valuation aspect will determine the Government’s share in the pricing, which could be taken by the EGoM later,” Chidambaram, also a member of the group, observed at its meeting on August 27.

On the issue of pricing Chidambaram said the government had to approve the pricing formula. “A decision needs to be taken whether the recommendations of the Prime Minister’s economic advisory council can be accepted or not,” he said and added that the council had already examined them and had commented that they followed international practices. “We should accept the EAC report as we are not experts on the subject. If required, we may request the EAC to have the formula explained to the EGoM,” he said.

However, it remained to be seen how the decision would impact the ongoing court cases, the finance minister pointed out. Reliance Natural Resources Ltd has written a letter to the EGoM on September 3 stating that since the Bombay High Court had restrained Reliance Industries Ltd from creating any third-party interest or rights on the gas it has found in the Krishna Godavari basin, it was an academic exercise for Reliance Industries to seek approval for is proposed gas pricing formula. The court has observed that Reliance Industries has already committed the initial 81.6 MMSCMD of gas from the Krishna Godavari basin to NTPC, Reliance Natural Resources and for its captive use.

The court has stated that out of the produce, the first lot of 12 MMSCMD will have to earmarked for NTPC, which is followed by another lot of 28 MMSCMD for Reliance Natural Resources.