Petroleum Minister M. Veerappa Moily on Tuesday ruled out reversal of the decision to double natural gas prices from April 1 next year and said a notification on this will be issued shortly.
“Absolutely, there is no question of reversing the decision to hike natural gas prices, as proposed by the Rangarajan panel report, or going back on the decision,” Moily told reporters here a day after meeting investors, bankers and analysts, ahead of the NELP-10 auctions.
The Minister said he was confident of resolving the issue of securing $135 million (around Rs 840 crore today) in bank guarantee from Reliance Industries Ltd within a fortnight.
RIL BANK GUARANTEE
RIL will have to provide the bank guarantee of $135 million to get a higher price for the natural gas it produces from April 1, 2014.
The same would be encashed if it is proved that the Mukesh Ambani-led company had hoarded gas at its Dhirubhai-1 and 3 gas fields in the KG-D6 block, located on the EastCoast of the country. The Ministry has sought the guarantee as the Government feels the fall in KG-D6 gas output is not because of geological reasons.
It will cover the difference between the current gas price of $4.2 a million British thermal unit (mBtu) and the rate of $8.4 a unit , which will come into effect from April 1, 2014.
However, the Minister praised RIL for its D-55 discovery, which he termed the biggest gas find in the country. In May, RIL had announced the natural gas discovery, which could arrest the falling output from the KG-D6 block.
The company is the operator of the block with 60 per cent interest, while the remaining is held by partners BP Plc of the UK and Niko Resources Ltd of Canada.
Moily said the 10th round of the New Exploration Licensing Policy (NELP) would be announced by January 15. Under this round, 86 hydrocarbon blocks would be up for bidding, out of which 54 have received clearances from various agencies.
NELP was formulated in 1997 as a common platform for public and private sector companies to bid for the blocks. However, in the last 16 years, a number of blocks got stuck due to lack of clearances from the Defence and Environmental Ministries.
Moily said the auctions under NELP-10 will follow the existing production sharing contract model where companies bid for blocks based on a cost-recovery model.
He said some exploration companies have reservations on the revenue sharing model. “Some more brainstorming will happen with them, we don’t want to impose anything on them,” Moily said.
A committee under Prime Minister’s Economic Advisory Council head C. Rangarajan had recommended a revenue-sharing model instead of the cost-recovery model. Later, another committee headed by Vijay Kelkar, former Finance Secretary, was appointed to suggest ways to improve oil and gas production and make energy sustainable in the country.
“The interim report of the Kelkar Committee would be submitted in the next few days. All recommendations would be incorporated quickly,” Moily said.
rahul.wadke@thehindu.co.in