Reliance piped gas to cost a third less than cooking gas of oil PSUs

New Delhi, Nov 27 | Updated: Nov 28 2006, 07:36am hrs
Mukesh Ambani said on Monday the price of gas supplied to its city gas consumers would be one-third the price of cooking gas (liquefied petroleum gas) being supplied by oil PSUs. This strategy is similar to the one adopted by the Reliance group in 2003 in the telecom business when it announced 40 paise a minute calls and forced competition to take notice.

Speaking on the sidelines of the India Economic Summit, RIL chairman Mukesh Ambani said, Our company hopes to supply piped gas to 100 cities across the country by 2010 at rates cheaper than cooking gas cylinders. At present, a gas cylinder costs Rs 295 to the consumer, with PSUs bearing a subsidy cost of Rs 150.

RIL has applied for city gas distribution licence in 100 cities and is awaiting finalisation of the city gas distribution policy by the government. Currently, only a few cities like Delhi and some in Gujarat have gas networks providing clean piped gas to households.

Ambani said that around 20 million homes would have access to piped gas by 2010. He said even at the present LPG cylinder price, the piped gas being provided through city gas networks was around 30-45% cheaper basically due to use of cost effective technology. The use of smart technology will help to deliver benefits directly to households, he said.

The petroleum ministry is ready with the policy for laying natural gas pipelines and setting up city gas distribution networks with a view to protecting consumer interest and simultaneously assuring adequate returns to investors.

Reliance expects to begin production from its Krishna-Godavari basin block by mid-2008. The reserves in the biggest gas discovery of 2003 are being continually revised upwards with 25 out of 33 wells drilled so far yielding new finds, said Ambani.

There are large quantities of gas in the KG basin and India is likely to find more natural gas than oil in the future, he said. Ambani said the company expected revenues from its gas business to start contributing to the overall turnover of Reliance from 2009-10.