EGoM on gas to keep off pricing issue

NEW DELHI: A new empowered group of ministers (EGoM) led by finance minister Pranab Mukherjee will focus on the allocation of additional gas from the Krishna-Godavari basin operated by Reliance Industries and steer clear of fixing the prices, petroleum secretary RS Pandey told ET.

The government had announced the formation of the EGoM early this week but had shied away from specifying the exact mandate of the panel.

���This (fresh allocation of gas) is expected to be done shortly as the EGoM has been constituted to decide commercial utilisation of gas under Nelp and related matters,��� Mr Pandey said.

RIL, which is expected to ramp up production to 80 mmscmd by the year-end, had been demanding that the government decided allocation beyond the first 40 mmscmd at the earliest to enable it to enhance production from KG D-6 block.

Mr Pandey said the EGoM���s terms of reference does not include topics such as valuation. An EGoM has powers similar to the Cabinet, but it restricts its decisions to subjects specified in the terms of reference.

The EGoM constituted for KG gas by the previous UPA government had also included pricing as part of its terms of reference.

���As the pricing and its formula has been arrived after wide consultation, there is no reason to change it so soon. Besides, it has been decided that the pricing formula would be applicable for a period of five year,��� said another government official who did not wish to be identified.

The EGoM had mooted a price of $4.2 per million British thermal unit (mmbtu) for KG gas.

The constitution of the EGoM and finalisation of its powers is good news for both producers and consumers who have been demanding early release of gas from the KG block for meeting the fuel requirements of their projects, especially in the power sector.

The EGoM was formed after petroleum minister Murli Deora put in a request to the Prime Minister���s Office. Earlier, the power ministry had also asked Mr Deora to propose constitution of the EGoM in the interest of the power sector, which is facing an acute shortage of gas. In fact, the ministry had put forward a demand for an additional allocation of 40 mmscmd of gas for new power plants.

Besides Mr Mukherjee, the EGoM includes petroleum minister Murli Deora, home minister P Chidambaram, power minister Sushil Kumar Shinde, fertiliser minister M K Alagiri, law minister Veerappa Moily and Planning Commission deputy chairman Montek Singh Ahluwalia.