Thursday, August 6, 2009

Anil Ambani group says pressure working on Reliance Industries

The Anil Dhirubhai Ambani Group Thursday said it was surprised to note a sudden increase in the output of gas from the Krishna-Godavari basin by Mukesh Ambani's Reliance Industries just few days after the matter was raised publicly.

"This clearly confirms our view that the contractor (Reliance Industries) is holding the gas and only public scrutiny and comments are succeeding in putting pressure on the contractor to increase production," said J.P. Chalasani, chief executive of Reliance Power, which is part of the Anil Ambani group.

The comment came against the backdrop of Petroleum Minister Murli Deora informing the parliament Thursday that the current level of production from the Krishna-Godavari was 35 million units per day, just three days after he had put the figure at 31 million units.

Chalasani also reacted to another remark by Deora that the availability of gas in the country had undergone a change for the better and said this again reaffirmed his group's view that scarcity of this natural asset in India was a thing of the past.

"In the future there would only be gas surpluses."

The Reliance Power executive also sought to draw the attention to the oil minister's statement that at the current price of $4.2 per unit, there would be a saving for the government to the extent of Rs.3,000 crore towards fertiliser subsidy.

"However, it could be substantially higher, amounting to over Rs.5,000 crore, if the gas was priced at $2.32 per unit as quoted by Reliance Industries and finalised through international competitive bidding conducted by NTPC," he said.

"Under the scenario of selling the gas at $2.32 per unit, while the government achieves a lower subsidy in the fertiliser sector, it can also completely protect its profit share by maintaining the valuation of the gas at $4.2 per unit."

He said while the price of gas as per the administered price mechanism, where the price is fixed by the government, is $2 per unit, the selling price of the contractor is $4.2 per unit, which is at a premium of over 100 percent over state-fix price.

Chalasani's comments also came against the larger issue of the legal dispute between Anil Ambani's Reliance Natural Resources and his elder brother Mukesh Ambani's Reliance Industries over the gas, off the coast of Andhra Pradesh.

Last month, the Bombay High Court had asked Reliance Industries to supply 28 million units of gas from the fields to Reliance Natural Resources for 17 years at $2.34 per unit after assigning 12 million units to a state-run power utility NTPC.

But Reliance Industries challenged the verdict in the Supreme Court, which heard the case July 20 and fixed Sep 1 as the next date of hearing. It also asked all parties to file their replies on the government position on the matter by then.

During the discussions in parliament Thursday, Deora had ruled out a government takeover of the distribution of Krishna-Godavari gas.

"The old days of nationalisation are gone," the minister told the Rajya Sabha during a calling attention motion after some members, led by Communist Party of India-Marxist (CPI-M) leader Tapan Kumar Sen, suggested a state takeover of the gas distribution.

In a written the minister also said the government will examine proposal to fix a uniform domestic price for natural gas, based on where the hydrocarbon asset has been discovered.

"A study to consider the feasibility of having a uniform cost price regime is being undertaken, the report of which is expected to be made available within three months."

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