News Release Details
Plan panel wants gas price regulator
New Delhi 10-Jul-2007
The Planning Commission, directed by Prime Minister Manmohan Singh to provide an independent view on the gas pricing and allocation issues, has held that market prices of gas should be determined by an independent regulator in the absence of a gas market. Bids received from power and fertilizer companies cannot be taken as market-driven prices as the fuel cost for both the sectors are passed on automatically to the consumer. Hectic parleys are on and stakeholders from the gas-producing and gas-consuming industries are busy making presentations to build their cases. It is leamt that Reliance Industries (RIL) chairman Mukesh Ambani met members in the Planning Commission on Monday to discuss issues related to KG basin gas pricing. This follows a presentation by AD AG's Anil Ambani in mid-June on the issue. RIL and ONGC are slated to make official presentations on the issue to the committee of secretaries on Tuesday. The Planning Commission's view is likely to be taken into consideration during the PM's energy coordination committee meeting on the issue. The PMO has directed the Plan panel to take an independent view following allegations by Andhra Pradesh chief minister YSR Reddy against RIL's recent price discovery of KG basin gas. The commission's views, if accepted could have a major impact on RIL's plans as it would require market prices to be determined afresh. RIL had invited bids from power and fertiliser companies to determine a market benchmark for the prices. However, the formula on which the gas price was to be determined is subject to government approval. The bids for RIL's gas will only hold true if the gas pricing formula adopted by the company is approved by the petroleum ministry. It is also not dear which authority could serve as an independent regulator. The Petroleum & Natural Gas Regulatory Board is not empowered to have a say in fixing gas prices. The board can only intervene in case of restrictive trade practices that could impact the government's share of profit petroleum. The commission also said Andhra Pradesh's demand to concede at least 5 0 % of the free gas (government's share) is not a simple issue and home states may not be able to demand such a large share. Gas from the offshore block is a contentious issue among the neighboring states as well, an official said. The Andhra Pradesh government has asked for 50% of free gas without resorting to "legal technicalities of whether the resources are found onshore or offshore, as per the spirit of the recommendations of the 12th Finance Commission". Commenting on the state's demand for a carriage charge, an official in the Planning Commission said it would open up the Pandora's Box.
New Delhi 10-Jul-2007
The Planning Commission, directed by Prime Minister Manmohan Singh to provide an independent view on the gas pricing and allocation issues, has held that market prices of gas should be determined by an independent regulator in the absence of a gas market. Bids received from power and fertilizer companies cannot be taken as market-driven prices as the fuel cost for both the sectors are passed on automatically to the consumer. Hectic parleys are on and stakeholders from the gas-producing and gas-consuming industries are busy making presentations to build their cases. It is leamt that Reliance Industries (RIL) chairman Mukesh Ambani met members in the Planning Commission on Monday to discuss issues related to KG basin gas pricing. This follows a presentation by AD AG's Anil Ambani in mid-June on the issue. RIL and ONGC are slated to make official presentations on the issue to the committee of secretaries on Tuesday. The Planning Commission's view is likely to be taken into consideration during the PM's energy coordination committee meeting on the issue. The PMO has directed the Plan panel to take an independent view following allegations by Andhra Pradesh chief minister YSR Reddy against RIL's recent price discovery of KG basin gas. The commission's views, if accepted could have a major impact on RIL's plans as it would require market prices to be determined afresh. RIL had invited bids from power and fertiliser companies to determine a market benchmark for the prices. However, the formula on which the gas price was to be determined is subject to government approval. The bids for RIL's gas will only hold true if the gas pricing formula adopted by the company is approved by the petroleum ministry. It is also not dear which authority could serve as an independent regulator. The Petroleum & Natural Gas Regulatory Board is not empowered to have a say in fixing gas prices. The board can only intervene in case of restrictive trade practices that could impact the government's share of profit petroleum. The commission also said Andhra Pradesh's demand to concede at least 5 0 % of the free gas (government's share) is not a simple issue and home states may not be able to demand such a large share. Gas from the offshore block is a contentious issue among the neighboring states as well, an official said. The Andhra Pradesh government has asked for 50% of free gas without resorting to "legal technicalities of whether the resources are found onshore or offshore, as per the spirit of the recommendations of the 12th Finance Commission". Commenting on the state's demand for a carriage charge, an official in the Planning Commission said it would open up the Pandora's Box.