EGoM to decide on revision of KG-D6 gas price
New Delhi: An Empowered Group of Ministers (EGoM) headed by Defence Minister A K Antony will soon decide if price of natural gas produced by Reliance Industries from KG-D6 fields can be revised before due date of 2014.
"I have not yet spoken to new EGoM Chairman A K Antony. We would like to call meeting (of the EGoM) as early as possible," Oil Minister S Jaipal Reddy told reporters here.
The EGoM was reconstituted last month after its previous head Pranab Mukherjee resigned as Finance Minister to become the President.
Antony previously was not part of the EGoM and has been included after Mukherjee's exit. The Finance Ministry will now be represented by Minister of State for Finance Namo Narain Meena on the EGoM.
Besides Antony and Meena, the EGoM includes Oil Minister S Jaipal Reddy, Power Minister Sushil Kumar Shinde, Fertiliser and Chemicals Minister M K Alagiri, Law and Justice Minister Salman Khurshid and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
RIL has demanded a market price of KG-D6 gas instead of USD 4.205 per million British thermal unit rate fixed for five years ending March 31, 2014.
"The EGoM (at its last meeting in February) had directed us to seek an opinion of the Attorney General G E Vahanvati if prices can be revised before the 5-year tenure fixed by the government," an official said.
"We have received the opinion of AG on the price of RIL gas and it will now be put up before EGoM for a decision," he added.
The nation's highest law officer has opined that the contract for KG-D6 does not mandate any fixed period during which the approved price would remain valid.
AG felt that revision of prices is advisable or not is a matter which the EGoM would have to determine not as a matter of law, but as a matter of policy.
The official said the Oil Ministry will not recommend price change before April 1, 2014.
Meanwhile, RIL has submitted a proposal to price KG-D6 gas at import parity from April 2014 and not with immediate effect.
The government had in 2007 approved USD 4.205 per mmBtu price for KG-D6 gas for first five years of production. RIL began output from KG-D6 on April 1, 2009.
The company, which has seen output halve to less than 30 million standard cubic meters per day in past two years, is seeking market price which will help it deploy deep sea technologies to exploit difficult sections of the reservoir.
India imports liquefied natural gas (LNG) at three times the price fixed for KG-D6 gas and RIL is seeking that price for the eastern offshore fields.
The Oil Ministry is, however, opposed to any revision in rates before timeline fixed by the EGoM.