Ministers’ panel may tweak KG gas price formula today
The empowered group of ministers (EGoM), set up to consider RIL’s KG basin gas formula, is scheduled to meet on Wednesday morning.
By TNN |
NEW DELHI: The empowered group of ministers (EGoM), set up to consider RIL’s KG basin gas formula, is scheduled to meet on Wednesday morning. The third meeting of the EGoM is expected to deliberate on the RIL’s proposed formula and the price-discovery process through which the company arrived at a price of $4.33/MMBTU (at the well-head).
Based on the comments of certain members of EGoM at previous two meetings, it is expected that the group would suggest a modified formula. Consequently, RIL’s discovered price could be marginally reduced.
Even as broad consensus has emerged over RIL’s gas-pricing formula, the EGoM may invite PM’s economic advisory council (EAC) chairman C Rangarajan in Wednesday’s meeting to provide some input, a person in the know said. It is learnt that EAC had revisited the formula and it would bring forth its view on Wednesday. Sources said Mr Rangarajan had asked the EAC member, Saumitra Chaudhuri, and its secretary, Alok Sheel, to re-examine the issue of gas pricing. Sources said that EGoM is in favour of adopting a focused approach on issues of commercial utilisation and pricing of gas in the light of New Exploration & Licensing Policy (Nelp).
It has been discussed that the production-sharing contract (PSC) signed between the government and the contractor (RIL-Niko in this case) under Nelp provides marketing freedom to the contractor, and the government’s role is only confined to approving the pricing “formula or process” for valuation of its share (profit petroleum / gas).
Members of the group are finance minister P Chidambaram, petroleum minister Murli Deora, power minister Sushilkumar Shinde, fertiliser minister Ram Vilas Paswan, law minister HR Bhardwaj, planning commission deputy chairman Montek Singh Ahluwalia and corporate affairs minister Prem Chand Gupta.
Based on the comments of certain members of EGoM at previous two meetings, it is expected that the group would suggest a modified formula. Consequently, RIL’s discovered price could be marginally reduced.
Even as broad consensus has emerged over RIL’s gas-pricing formula, the EGoM may invite PM’s economic advisory council (EAC) chairman C Rangarajan in Wednesday’s meeting to provide some input, a person in the know said. It is learnt that EAC had revisited the formula and it would bring forth its view on Wednesday. Sources said Mr Rangarajan had asked the EAC member, Saumitra Chaudhuri, and its secretary, Alok Sheel, to re-examine the issue of gas pricing. Sources said that EGoM is in favour of adopting a focused approach on issues of commercial utilisation and pricing of gas in the light of New Exploration & Licensing Policy (Nelp).
It has been discussed that the production-sharing contract (PSC) signed between the government and the contractor (RIL-Niko in this case) under Nelp provides marketing freedom to the contractor, and the government’s role is only confined to approving the pricing “formula or process” for valuation of its share (profit petroleum / gas).
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Petroleum ministry is in favour of honouring PSC as the case would have an impact on 164 PSCs, already signed under Nelp. The ministry maintains that PSC deals with both gas allocation and its valuation without any ambiguity. The EGoM is chaired by external affairs minister Pranab Mukherjee. Members of the group are finance minister P Chidambaram, petroleum minister Murli Deora, power minister Sushilkumar Shinde, fertiliser minister Ram Vilas Paswan, law minister HR Bhardwaj, planning commission deputy chairman Montek Singh Ahluwalia and corporate affairs minister Prem Chand Gupta.
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