The Hindu : Front Page : No accord yet on Reliance gas price

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Friday, Dec 08, 2006
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No accord yet on Reliance gas price

Special Correspondent

Company asked to quote the price first

HYDERABAD: Even as gas shortage is clearly foreseen for the State, the signing of an MoU by the Government with Reliance Industries Limited (RIL) for supply from its find in the Krishna-Godavari basin may cause delay due to differences over price.

At a recent meeting with RIL representatives, Chief Secretary J. Harinarayan extracted an assurance that the State's needs projected at 40 MCMD (million cubic metres per day) would be fully met before the gas from this find was taken to others. The RIL wanted to sign an MoU to this extent but it could not be signed, with the Government insisting on the company to quote the price first. The RIL promised supply from the find from July 2008.

The Government is of the view that price holds the key as to whether the State stands to gain out of the Reliance's off-shore find as popularly believed. It is insisting on a price of US $ 3.3 per MMBTU (million metric British thermal units), the rate at which ONGC-Cairns consortium supplied gas their Ravva Fields before increasing it to US $ 4.5 per MMBTU in September. While gas users, especially power projects, are fearing that the price may go up to $ US 6 per MMBTU in future, an "administered price" is being worked out by the Union Government.

Ravva purchases

Energy Minister Mohd. Ali Shabbir told reporters here on Thursday that the State Government had cut short its purchases from Ravva, protesting against the hike by the ONGC-Carins. He said the Union Government was veering around the AP Transco view that the hike was unjustifiable as no fresh investment had been made into Ravva Fields. The Chief Secretary was going to Delhi in three days to attend a meeting convened by the Prime Minister to resolve the issue.

Out of 40 MCMD sought by the State, 30 MCMD would go to power projects alone, including 23.59 MCMD for future gas-based projects.

Meanwhile, the new projects of Vemagiri, Gouthami, Konasema and GVK Extension (all with 1,499 MW capacity) are idle even after being commercially operational for want of gas. With the ONGC meeting its commitments only to the tune of 60 per cent, an installed capacity of 500 MW from the existing gas-based projects is also idle. The Minister blamed the previous Telugu Desam regime for the present predicament saying that gas supply agreements were signed with transporters like GAIL and not with ONGC, the producer.

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