Reliance Industries says Aam Aadmi Party allegations 'factully incorrect'

Mar 12 2014, 20:36 IST
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Reliance Industries said there was 'not even an iota of substance' in the allegation. Reuters Reliance Industries said there was 'not even an iota of substance' in the allegation. Reuters
SummaryReliance Industries has refuted allegations by the Aam Aadmi Party (AAP).

Reliance Industries has refuted allegations by the Aam Aadmi Party (AAP) that oil ministers Mani Shankar Aiyar and S Jaipal Reddy were removed because they did not favour the company, saying the "malafide propaganda" was "factually incorrect."

Terming as "malafide propaganda" AAP's allegation that Aiyar had to go because he opposed RIL's move to raise KG-D6 capital expenditure 2.5 times, the company said Aiyar left the oil ministry in January 2006 while the revised USD 8.8 billion field development plan was submitted in October 2006.

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On allegations that Reddy was removed because he opposed higher gas prices for RIL, the company said, "It was Mr Jaipal Reddy (and not current Oil Minister M Veerappa Moily) who requested for the appointment of the Dr Rangarajan Committee in May 2012. It was on this committee's recommendations, the CCEA approved the revised gas prices (from April 2014)."

The Rangarajan Committee suggested that domestically produced gas should be priced at an average of global hub rates and the cost of importing liquid gas (LNG) into India.

According to this formula, the price of gas is being increased to about USD 8 per unit in April. The current rate of USD 4.205 per million British thermal units for gas from RIL's eastern offshore KG-D6 field expires on March 31.

"The prices had to be revised not because of the elections but because the prevailing price formula ceases to be valid with effect from April 1, 2014," RIL said in documents it released giving a detailed account of facts and arguments aimed at countering its critics.

On AAP's allegation that the price hike would result in a windfall of Rs 54,000 crore for RIL, the company said the new rates will raise the revenue earned on the country's entire gas production by Rs 26,000 crore.

"Of this increase, Rs 12,000 crore comes back to the government as royalty, profit petroleum, taxes and dividend. The share of RIL and its partners is only Rs 3,000 crore (not Rs 54,500 crore), which goes to meeting capital as well as operational costs before it can be counted as profit," it said.

Gas from KG-D6 barely makes up 15 per cent of the nation's entire production of the fuel.

Responding to an allegation that the cost of KG-D6 gas production was less than USD 1 per mmBtu, the firm said, "The

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