Allow market-based pricing for gas, Reliance Industries urges Rangarajan panel
The fresh comments by RIL are a reaction to a purported draft report from the panel that asks for changing the cost recovery mechanisms to be written in the production sharing contracts for future bids. A six-member committee headed by the Prime Minister’s Economic Advisory Council chairman currently reviewing the contracts has apparently suggested that gas production should be shared between the government and the contractor on a new format.
RIL’s executive director PMS Prasad has written a letter to Rangarajan on October 30 arguing that to continue the flow of investments in the sector it is necessary to ensure that the terms of the existing exploration and licensing policy and the production sharing contracts signed should not be deviated from “in letter and spirit”. He has noted that RIL, as the contractor, was willing to try for an open-market price discovery, but under the gas utilisation policy approved by an empowered group of ministers in 2010 this was not possible.
“We trust that the committee will make recommendations ... which stipulates that all gas produced by the contractor will be sold at an arm’s length market price.”
RIL currently gets paid $4.2 per mmscmd for the gas it extracts from the offshore KG-D6 fields. But its production has slipped drastically due to a host of problems. The
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