The Hindu : Front Page : Reliance ready to supply gas at lower rate

Online edition of India's National Newspaper
Sunday, Apr 08, 2007
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Reliance ready to supply gas at lower rate

A. Saye Sekhar

Pipeline network from KG Basin to be ready by June 2008, says RIL official

HYDERABAD: Reliance Industries Ltd will supply gas through pipelines at much lesser cost as compared to the LPG cylinders, once its city gas network is in place.

While a 14.2 kg (net weight) gas cylinder costs Rs. 300, excluding the Government subsidy of more than Rs. 125, RIL can supply the same quantity of gas for Rs. 200 to Rs. 220, President and Chief Executive Officer of RIL P.M.S. Prasad told visiting journalists from Hyderabad on Friday at Mumbai. And, this relieves the customers of the pain of booking the cylinder and waiting for 21 days to book another one.

Mr. Prasad said that the RIL, which had already commenced the laying of its trunk lines on the East-West pipeline network from the KG Basin, would complete the work by June 2008. While the East-West pipeline would connect Kakinada (Andhra Pradesh) to Jamnagar in Gujarat, another line would go up to Tuticorin in Tamil Nadu. Two more lines would be laid from Mumbai to Kochi and from Kakinada to Haldia in West Bengal, investing between Rs. 25,000 crores to Rs. 30,000 crores. Eventually, this network would be connected to the GAIL's gas grid so as to link major towns in South India. Mr. Prasad said that it was not viable for the company to supply gas at US $ 2 per Million Metric British Thermal Units (MMBTU), as sought by the Andhra Pradesh Government. While the per MMBTU price at wellhead worked out to US $ 3.5, the company could supply at US $ 4.5. He said that the prices of oil and gas could not be regulated by one country as they were market-driven. The gas could not be supplied on the basis of Administered Price Mechanism (APM), for the Government of India wanted the prices to be marke-driven. At least 70 per cent of the profit earned by the company would go straight to the Union Government as part of the strategic profit-sharing agreement. The company would have to pay different taxes on the remaining profit it would make.

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