Oil ministry rebuts Arvind Kejriwal claims; says govt to get $2.08 bn

Written by Press Trust of India | New Delhi | Updated: Feb 12 2014, 05:12am hrs
Arvind KejriwalThe government will get incremental revenue from additional profit petroleum. Reuters
Rebutting Delhi Chief Minister Arvind Kejriwal's allegations that gas price hike will benefit Reliance Industries, the Oil Ministry today said the government will get USD 2.08 billion (Rs 12,900 crore) from the doubling of the rates.

The government will get incremental revenue from additional profit petroleum, royalty and taxes accruing from natural gas prices rising to USD 8-8.4 per million British thermal units from USD 4.2 per mmBtu in April.

Sources said state-owned Oil and Natural Gas Corp (ONGC), the nation's largest producer of gas at 64 million standard cubic meters per day, will get USD 1.64 billion in incremental revenue, while Oil India Ltd will get USD 0.19 billion on 7.5 mmscmd of production.

RIL and partners BP Plc of UK and Niko Resources of Canada will get USD 0.51 billion additional revenue on 14 mmscmd of output.

The government will get USD 500 million in royalty and profit petroleum and USD 1.16 billion from taxes on the additional revenue earned by companies. Another USD 0.42 billion will flow from dividend payments, they said.

The price hike, which was approved by the Cabinet based on a recommendation of a panel appointed by Prime Minister Manmohan Singh, will benefit ONGC and OIL more as they produce 80 per cent of the country's gas, sources said.

Kejriwal today said a police complaint will be filed against RIL Chairman Mukesh Ambani and Oil Minister Veerappa Moily for creating an artificial shortage of gas in the country and raising prices.

He alleged the new gas pricing formula would yield Rs 54,000 crore of profit for RIL every year.

Sources said Kejriwal was misleading by comparing the cost at which Niko sells gas in Bangladesh because the field there is onshore and requires far lower capital than a deepsea area such as KG-D6.

On the impact of the price hike on electricity tariffs, sources said 5 per cent of the power generated in India is gas-based and the price hike would increase the cost of generation by about Rs 1.57 per unit.

The gas price hike will lead to USD 1.66 billion in additional outgo on fertiliser subsidy.

Also, the Supreme Court, after going into RIL's quote of USD 2.34 for supply of gas to NTPC's power plants, had in May 2010 upheld the USD 4.2 per mmBtu price for gas from RIL's eastern offshore KG-D6 fields.

The term of that price ends in March and Prime Minister's Economic Advisory Council Chairman C. Rangarajan had suggested pricing gas at an average of international hub prices and the rate at which India imports LNG.