Fertiliser sector’s jitters over RIL gas price alert govt

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A committee of secretaries (CoS) headed by Cabinet secretary KM Chandrasekhar has submitted a report on pricing of natural gas from Reliance Industries’ Krishna-Godavari (KG) fields to the Prime Minister’s Office. The report calls for addressing the contention of fertiliser sector that the government subsidy burden would go up substantially if the delivered price of gas was higher than $3 per mbtu (RIL’s delivered price came to around $6 per mbtu), while deciding on the price, sources said.

Chandrasekhar handed over the report to the PMO on Thursday evening, sources in the Cabinet Secretariat said.

The report is believed to have agreed with the contention of ministeries of petroleum and law that the government needs to honour its contractual obligation, but stressed on providing the fuel to fertiliser and power sectors at affordable prices.

The ministries of petroleum and law had separately pointed out that the commitment under Parliament-enacted New Exploration Licensing Policy, which promises an investor freedom to sell oil and gas at market determined prices, needed to be honoured to show the stability of policy and contracts to international investors.

Mukesh Ambani’s RIL had won the KG-D6 block in first round of NELP in 2000. The price of $4.33 per million British thermal unit proposed by RIL for the gas it plans to produce from KG-D6 from July 2008 had met stiff opposition from power and fertiliser sectors in general, and Mukesh’s younger brother Anil in particular.