The Petroleum & Natural Gas Ministry is examining whether Reliance Industries should be asked to sell the unmet supplies from the D6 fields at rates lower than the new price effective from 2014.
This follows a suggestion from the Finance Ministry that Reliance should be asked to sell the gas at cheaper rates, rather than get benefits of the new gas price, which if the current trend continues, will be almost double the present price.
“They (Finance Ministry) want us to consider some issues including asking Reliance to sell gas at lower rates ($4.2 a unit) for the supplies it still owes. We are examining it,” a Senior Petroleum Ministry official told
However, the timing of the Finance Ministry’s letter has raised questions within as well as outside the Government. For one, why was the matter being raised after the Cabinet Committee on Economic Affairs (CCEA) took the decision in June on domestically produced gas price? Also, the CCEA note was deliberated upon by all the key Ministries, including Finance, so why was this not suggested then?
On July 11, M Veerappa Moily, the Petroleum & Natural Gas Minister, when asked about the Finance Ministry’s suggestion, had said that there would be no going back on the CCEA’s decision.
Moily had reiterated that there would be no distinction between companies as far as gas pricing was concerned. “There is no thinking in the Government for any review or reconsideration of the decision of the CCEA,” he stressed.
The D6 block is currently producing 13.9 million standard cubic metre a day (mmscmd) against a supply commitment of about 61 mmscmd. The output from the largest fields in the block (D-1 and D-3) after hitting a peak of 60 mmscmd in 2010 has been constantly declining. The output from the block is expected to increase from 2017-18. The Government has come in for criticism for its decision, as this could result in an increase in gas prices and Reliance was being seen as the largest beneficiary. The Finance Ministry also suggested that the Government must subject gas producers to closer regulation, especially on the aspects of cost recovery and technical parameters related to production.