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Oil ministry lists KG gas gains to defuse charges

business Updated: Jul 05, 2011 02:22 IST
Anupama Airy
Anupama Airy
Hindustan Times
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In what appears to be a move by the petroleum ministry to counter the observations of the Comptroller and Auditor General (CAG) in its draft report over huge losses to the Central exchequer on account of favours extended to private operators like Reliance Industries (RIL) in developing India's biggest gas field- KG-D6, the ministry has prepared a note detailing a Rs 8,000 crore financial benefit to the government from usage of Reliance's KG-D6 gas by the fertiliser sector alone.

"The cost of savings by supply of KGD6 gas (for the present 15.35 mmscmd gas going to the urea industry) is about Rs 8,000 crore per annum," the petroleum ministry's note says quoting the details from the fertiliser ministry.

The note also said if 23.35 mmscmd KG-D6 gas is used instead of naphtha and industrial oils – currently being used by the fertiliser sector — a total saving of Rs 17,708 crore is estimated per year.

"With the government doling out Rs 55,000 crore every year as subsidy for the fertiliser sector, a saving of Rs 17,708 crore would substantially cut down the government subsidy to the sector," a senior petroleum ministry official told HT.

A similar note on the savings of public money on account of cheaper electricity produced using KG-D6 gas vis-à-vis the imported gas is also underway. http://www.hindustantimes.com/images/HTPopups/050711/05_07_11-buss25b.jpg

A petroleum ministry letter to the power ministry said power plants using KG-D6 gas are producing power at the rate of Rs 3 per unit as against power cost of Rs 7 per unit being produced using the imported gas. "We have asked the power ministry to confirm the same through a detailed working," the petroleum ministry official said.

Quoting the information from fertiliser ministry, the petroleum ministry note said the allocation of KG D6 is helping the domestic urea industry cut production costs.

"This results in substantial savings of public money and the policy is in public interest, helping millions of small and marginal farmers in increasing agricultural production and productivity, thus also contributing to country's food security," it said.