EGoM fails to decide on RIL gas pricing, will meet on Thursday

New Delhi, Aug 28 (UNI) The empowered group of ministers (EGoM) on gas pricing, which failed to arrive at a concrete decision on pricing of gas from Reliance Industries' D6 block in the Krishna-Godavari basin for the second consecutive day today, will meet again on Thursday.

The EGoM will meet after two days to sort out the issue, official sources said.

The ministry supported RIL's proposed price of 4.33 dollar per million British thermal unit (mBtu) as it is lower than the market price of around 4.75 dollar per mBtu that gas from the Panna-Mukta and Tapti fields is being sold for.

The EGoM is to take a decision on the pricing and usage on the basis of a report of the Cabinet Secretary and the Prime Minister's Economic Advisory Council (EAC) that went into the issue.

Sources said the EGoM went through the reports of the Committee of Secretaries headed by the Cabinet Secretary and also that of the Economic Advisory Council (EAC) of the Prime Minister. The EAC has pointed out to a lack of transparency in the bidding process adopted by Reliance Industries Limited (RIL) and putting in place a formula that was in the interest of the consumers and completely transparent.

The EGoM, under pressure to take an early decision ''given that RIL gas is slated to be in the market by June 2008'' is expected to ignore the issue of allocation to power and fertiliser sectors and concentrate on the RIL formula for price discovery, sources said.

It was felt there was a need to study the formula and New Exploration Licensing Policy (Nelp) prices even as the administered gas price structure be reviewed.

RIL had invited bids from select power and fertiliser companies along the pipeline route on a pre-fixed formula that had components like exchange rate, benchmark to crude etc. Although the Prime Minister's Economic Advisory Council had broadly endorsed the formula, the committee of secretaries (CoS) had raised questions.

The production-sharing contract (PSC) requires the government to approve the basis or formula for the market price quoted by the gas company.

UNI