SP demands probe into Reliance gas pricing issue

New Delhi, Aug 23 (UNI) Samajawadi Party (SP) leader Amar Singh today said the Empowered Group of Ministers (EGoM) that would meet on the Krishna-Godavari basin gas price issue will have to take into account the reports of the Economic Advisory Council to the Prime Minister and the Cabinet Secretary.

Raising the issue during zero hour in the Rajya Sabha, Mr Singh said it was totally unjustified that the price of 2.3 dollars per British Thermal Million Unit was fixed in 2003 but was being revised by 85 per cent to 4.33 dollar per million British thermal unit (Mbtu).

He also said the capital expenditure on the KG basin was revised thrice from Rs 10,000 crore to Rs 36,000 crore and said termed it as a mega scam (maha ghotala).

Mr Singh said the EGoM should also consider several letters to the Centre by Andhra Pradesh Chief Minister Y S Rajasekhara Reddy regarding the matter.

CPI-M member Tapan Kumar Sen added that the gas pricing should not result in a 'windfall' for the KG basin contractor.

Led by External Affairs Minister Pranab Mukherjee, the EGoM is expected to meet on August 27 to decide on the vexed issue of gas pricing and utilisation of gas from new fields like the KG-D6 of Reliance Industries.

The decision will be based on inputs from a committee of secretaries (CoS) and the Prime Minister's Economic Advisory Council (EAC) that went into the whole issue.

Drawing from its right under the contract for KG-D6 block, RIL has demanded an increase in gas price from 4.33 dollars per mBtu to 4.58 dollars.

It has been opposed by key consuming sectors like fertiliser and power, and Mukesh's younger brother Anil Ambani.

The CoS, under Cabinet Secretary K M Chandrasekhar, in its report upheld RIL's right to fix the price of gas, saying the sovereign commitment given in NELP can't be altered.

It, however, asked Petroleum Ministry to frame a Natural Gas Utilisation Policy and Natural Gas Pricing Policy before approving RIL's gas price.

EAC found RIL's pricing formula to confirm to market practice and said allocations made to priority sectors like fertiliser and power should only be at a market driven price.

It, however, wanted RIL to invite bids for setting the price again.

The EGoM comprises of Finance Minister P Chidambaram, Petroleum Minister Murli Deora, Power Minister Sushilkumar Shinde, Fertiliser Minister Ram Vilas Paswan, Law Minister H R Bhardwaj, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Corporate Affairs Minister Prem Chand Gupta.

The company had won the KG-D6 block in first round of NELP in 2000 and plans to produce gas from KG-D6 from July 2008.

RIL was the first company to strike gas at the Krishna-Godavari basin in the first round of NELP announced by the government in 2000.

UNI