OilMin`s interference responsible for NELP`s flop: Anil

Last Updated: Monday, October 12, 2009 - 21:05

New Delhi: Anil Ambani group on Monday said the
Oil Ministry`s interference in marketing and pricing dampened
investor interest in India`s auction of oil and gas blocks and
its Chairman had warned the Prime Minister about the same.

"Petroleum Ministry`s open interference by curtailing
marketing and pricing freedom is the single biggest reason for
lack of international investor interest," an ADAG spokesperson
said, quoting from a letter Anil Ambani had written to Prime
Minister Manmohan Singh on October nine.

The auction ended today with only 36 of the 70 blocks on
offer receiving bids.

Upstream regulator Director General of Hydrocarbons V K
Sibal earlier today attributed the poor response to the
ongoing Ambani gas battle.

However, ADAG said Anil Ambani had forewarned that poor
response, if at all, would be due to changes in the Production
Sharing Contract by the Petroleum Ministry and not because of
the dispute between RIL and RNRL.

"Contrary to PSC provisions requiring government to
determine the valuation price for determining it`s Take,
Royalty, etc, the Oil Ministry now says that the government
has the right to decide the selling price of natural gas," the
spokesperson added.

ADAG claimed that global energy majors were concerned
about the Petroleum Ministry`s recent actions on the gas
pricing front, as this virtually amounts to "backdoor
nationalisation" of the pricing and utilisation mechanism
under NELP.

The ADAG spokesperson said Anil had rightly predicted the
response of NELP-VIII.

"The Oil Ministry either whittled down or simply withdrawn
many of the key pricing and marketing rights originally
granted to the contractor," an ADAG statement said.

BHP Biliton of Australia, BG of UK and Cairn Energy
were the only notable foreign companies that joined the bid,
besides home grown giants like ONGC.

Mukesh Ambani-led RIL did not put in any bid for oil and
gas blocks, although it showed interest in one Coal Bed
Methane block that is on auction separately.

ADAG argued that the Petroleum & Natural Gas Regulatory
Board (PNGRB) Act of 2006 keeps the petroleum regulator out of
the domain of gas pricing, resulting in a virtual carte
blanche for private monopolistic player like Reliance
Industries.

It sought amendment of the Act, stating that leaving
"this important task in the hands of the administrative
Ministry runs the risk of avoidable controversies and, worse,
compromising executive neutrality in the minds of
stakeholders.

"The stand taken by the Petroleum Ministry affects not
just the success of a particular policy initiative; it
undermines the very foundations of the economic reforms
process."

Bureau Report



First Published: Monday, October 12, 2009 - 21:05

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