Govt stands by its earlier stand in RIL gas pricing case

New Delhi, Aug 2 (UNI) The government today stood by its decision to reject the gas price formula of Reliance Industries Limited (RIL) and Reliance Natural Resources Limited (RNRL), saying that it was strictly in accordance with the Production Sharing Contract (PSC).

It also said that there was no contract between RIL and National Thermal Power Corporation (NTPC) for supply of gas to its Dadri Power Project in Uttar Pradesh, a statement by Petroleum Minister Murli Deora, read out in his absence by Minister of State for Parliamentary Affairs B K Handique, said.

Mr Deora gave this information in response to a question raised by Mr Mohan Singh (SP) on this issue.

The statement further said that the decision of the Government on gas price formula was strictly in accordance with the terms of the Production Sharing Contract (PSC), and at the same time, follows the principle of minimal intervention in day-to-day commercial operations of the investor companies. The Government is also committed to ensuring that there is no revenue loss to the public exchequer while approving the gas price formula in the PSC regime, he said, adding that it may be noted that the transaction between RIL and Reliance Natural Resources Limited (RNRL) is part of their demerger agreement and does not meet the PSC criteria of ''arms-length sales.'' The statement said the Government, after seeking certain clarifications and examination of the proposal, conveyed its decision to RIL on July 26 this year.

''Therefore, it would be incorrect to say that the Government took almost a year to convey its decision on the proposal. It may be added that it is dutyof this Ministry to encourage the contractors under the PSC to expeditiously bring the discoveries to production.

In this, there has been no delay onthe part of this Ministry. The time taken by the Government to convey its decision regarding the gas price formula approval has no bearing on the likely production date of the fields,'' it said.

Mr Deora's statement further said the specific issue raised with regard to the approval of the price formula by this Ministry relates to the proposal dated April 14, 2006, received from RIL, for approval of the formula for determining gas price for the purpose of computing cost of petroleum, profit of petroleum and royalty and other purposes under the contract. RIL had sought aproval for the formula as agreed between them and RNRL on January 1 this year. The proposal was examined in accordance with the contract provisions.

The provisions of the PSC provide for valuationof natural gas on the basis of ''competitive arms-length sales'' and enjoin upon the contractor to sell all natural gas to the benefit of the parties to the contract.

''These have direct relation to the gas price adopted for valuation under the contract. However, the Government is not a party to the Gas Sales Agreement (GSA) arrived between the sellers and the buyer,'' it said, but noted that it was also commited to ensuring that there is no revenue loss to the public exchequer while approving the gas price formula in the PSC regime.

Soon after the completion of the statement, Samajwadi Party members entered the well of the house, shouting slogans that the Government was misleading the house.

At this, Parliamentary Affairs Minister Priya Ranjan Dasmunsi requested the members to bring it to the notice of the Government through a Calling Attention motion and the Government would give all information.

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