The Hindu : Andhra Pradesh News : Gas price reduction appears a far cry

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Thursday, Sep 13, 2007
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Andhra Pradesh

Andhra Pradesh

Gas price reduction appears a far cry

M. Malleswara Rao

HYDERABAD: As Group of Ministers deliberated on the price to be fixed for KG basin gas at Delhi on Tuesday, indications were available that the price might be reduced a little but not so much as repeatedly sought by Chief Minister Y. S. Rajasekhara Reddy.

The Reliance Industries Limited (RIL) indicated its “market-discovered” price to all its prospective consumers, including Andhra Pradesh, at $ 4.33 per MMBTU while the Chief Minister has been waging a relentless battle for reducing it to the APM rate determined by the Centre ranging from $ 1.97 per MMBTU or at least to $ 2.34 per MMBTU, the price offered to the NTPC by the RIL. The Chief Minister took the stand that concessional price must be offered to AP as RIL’s reserves lay off its shores. However, the GoM is reportedly veering round the view that the State’s plea can be conceded by bringing the price to a level little less than $ 4 per MMBTU. As such, an APM/NTPC price appears to be a far cry for the State. Marginal reduction is not going to make big cost difference to a State which had been planning to set up several gas-based power projects and industries in the coming few years. Sources said the Centre is contemplating to change the nomenclature of the actual places where gas reserves have been struck, on and off shore, with a view to avoid the feeling of attachment among the Sates like AP towards KG basin. Instead, each reserve will be numbered.

By not having any gas distribution network to make supplies to industries and power projects, AP is likely to suffer yet another major disadvantage vis-À-vis RIL. A Government spokesman said the RIL has completed 60 p.c. of the contemplated pipeline from Kakainda to Jamnagar to take supplies to Gujarat. AP’s proposal to lay its own pipeline has been rejected by the Centre. Nor is the State in a position to obstruct RIL from taking the supplies to other States. The contention that AP will not allow RIL gas to go out without meeting its needs fully thus holds no water. The RIL, however, may meet the gas needs of the power projects located near its pipelines estimated at 17 MCMD but the State’s long-term requirement is nearly 80 MCMD.

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