The committee of secretaries (CoS) on pricing of gas from Reliance?s D6 block has told the Prime Minister?s Office to exercise caution before clearing the price formula. In its 33-page report to the PMO, the CoS headed by cabinet secretary KM Chandrasekhar has held that any decision at this stage may cast an impact on the High Court?s ruling on the NTPC case pertaining to sale of RIL gas at $2.34 per mbtu.
Close on the heels of the CoS?s verdict on the matter, the power ministry has also referred the issue to the law ministry. ?If the formula is cleared, RIL will go ahead with gas sales at a base price of $4.33 mbtu and the same can then be quoted in the High Court as the price approved by the government itself. The same concern has already been voiced by the cabinet secretary in his report to the PMO,? a power ministry official told FE.
The CoS has also held in its report that the petroleum ministry should evolve a gas utilisation policy (taking into account the requirement of priority sectors like fertiliser and power) within a month. A directive to this effect, sources said, has already come to the petroleum ministry from the PMO.
Meanwhile, in the wake of recent opposition to the pricing formula, RIL chairman Mukesh Ambani has dangled another carrot of advancing the peak production of 80 mscmd of gas from its D6 block by a full two years.
RIL has scheduled gas production from its D6 block from June 2008. Under RIL?s approved development plan, the peak production of 80 mmscmd was to commence from 2011-12. RIL has now told the government it would flush the domestic market with 80 mmscmd of gas within a year of commencing its production from the D6 block.