Anil Ambani's Reliance Natural Resources continued its attack on the government for allegedly favouring brother Mukesh Ambani's Reliance Industries Ltd on the sale price of gas from the Krishna Godavari D6 basin.
At $4.2 per million British thermal unit (mBtu), the price fixed, there is a premium of more than 100 per cent over the gas available through the administered pricing mechanism, it said.
RNRL's president J P Chalasani was reacting to petroleum minister Murli Deora's statement in Parliament today on availability of natural gas for power generation at an affordable price throughout the country.
"The minister stated that at the current gas price of $4.2 per mbtu, there would be annual savings in subsidy on fertilisers of Rs 3,000 crore (Rs 30 billion). However, this would be substantially higher at over Rs 5,000 crore (Rs 50 billion) if the gas was priced at $2.34 per mBtu as quoted by RIL and finalised through an international competitive bidding conducted by NTPC," Chalasani said.
"According to RIL's formula, as the crude price changes from $25 to $26 per bbl (a 4 per cent increase), the price of gas increases by $1 per mBtu which is an astronomic increase of 40 per cent. Even a 50 per cent decline in crude prices results in only a 10 per cent decline in gas prices," Chalasani added.
The pricing formula of KG D6 gas is engineered by RIL and had no prior approval of the oil ministry, he said.
"The process was rigged by inviting bids from select and stranded customers. Though the international crude prices have come down by over 55 per cent and gas prices by over 75 per cent, the price of RIL gas during the same period has gone up by over 20 per cent in rupee terms, as the price is denominated in dollar for domestic fuel," Chalasani added.
Hei quoted a cabinet secretary report of August 2007, saying, "Prima facie, the formula and process appears to suffer from several infirmities in respect of the formula employed and the bidding process. Most of the price is pre-fixed and not affected by the outcome of bidding."
Image: Anil Ambani
