The Hindu : Front Page : State seeks royalty on KG basin gas find

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Thursday, Jun 30, 2005

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State seeks royalty on KG basin gas find

Special Correspondent

Government keen on setting up gas grid; GAIL pushes for joint venture

HYDERABAD: The Andhra Pradesh Government is all set to demand its pound of flesh in the Gujarat State Petroleum Corporation's (GSPC) natural gas finds in the Krishna-Godavari basin off the State's coast.

Asserting that the Government will not remain a mute spectator to the exploitation of natural gas reserves by a `sister State,' the Chief Minister, Y. S. Rajasekhara Reddy, has said he has written to the Centre seeking a share in its royalty.

"We know that we do not get any royalty when it is an offshore find. We have written to the 12th Finance Commission some five months ago to consider our plea for a share in the Centre's royalty. Everyone has his needs. The Gujarat Government too has its needs. After all the GSPC has to route its supply through our land," Dr. Reddy told reporters here on Wednesday.

The Chief Minister said he had asked officials to immediately begin work on a proposal to constitute a gas grid. The Gas Authority of India Limited (GAIL) proposed to him in New Delhi on Tuesday the starting of a gas grid in the State as a joint venture. Instead of inviting private parties, the Government itself would take it up "in the larger interest of people."

Explosive situation

He said the Government was sitting on a time bomb in the form of Power Purchase Agreements (PPAs) with four private parties -- Vemagiri, GVK, Spectrum and Konaseema -- as it would be forced to pay at least Rs. 1, 200 crores from next year by way of a counter-guarantee to finance their fuel cost if gas supply was not ensured.

He had, therefore, appealed to the Prime Minister, Manmohan Singh, to either ensure ONGC supply to the private power producers or explore the possibility of establishing a barge-mounted LNG terminal in the State. Moreover, in view of the fact that new gas finds were attracting several private players, he had urged the Prime Minister to establish a regulatory authority to fix gas prices.

TDP legacy

Dr. Reddy said "short-sightedness" on the part of the TDP Government in the past had pushed the State into the present mess regarding the PPAs. The Government was exploring all legal options to avoid the burden caused by the counter-guarantee.

He said the TDP had wasted a golden opportunity by not heeding to the Confederation of Indian Industry's suggestion to start a corporation to explore the gas reserves. "They wanted to privatise everything. There is no point in starting one now after all rich finds are struck," he maintained.

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