| IN LINE OF FIRE
New Delhi, Sept. 13: The CPM today asked the government to reject the “artificially inflated” price of the Reliance gas that was approved by an empowered group of ministers (EGoM) yesterday.
A statement by the party politburo said market forces should not be allowed to determine the price of natural gas, which is a scarce resource.
“The government should reject the EGoM recommendation as such a high price would severely affect the viability of consumer industries such as power and fertiliser, which in turn would hit the common man,” the statement said.
The EGoM yesterday fixed the price for Reliance Industries’ gas from its fields in the Krishna-Godavari basin at $4.2 per million British thermal unit (mBtu), about 5.4 per cent less than the company’s asking price of $4.44 per mBtu.
According to the party leaders, the price is much higher than the $2.34 per mBtu quoted by Reliance just three years ago for gas to be supplied to the National Thermal Power Corporation (NTPC).
Mukesh Ambani’s Reliance had justified the 85 per cent hike over the NTPC quote on the grounds of higher capital costs and a rise in world gas prices.
In the statement, the CPM said the Reliance price was linked with the global price of crude oil and not with the cost of gas production in the country.
“There is absolutely no justification for such a link which is being made only to find a route to artificially inflate the price for windfall gain of the private company.”
Analysts said the new price meant gas to fertiliser and power companies would cost between $4.6 and $5.2 per mBtu at the point of delivery.
Reliance’s price formula was first opposed by NTPC and Anil Ambani’s Reliance Natural Resources Limited. Both took Reliance to court for dishonouring arrangements to sell gas at much lower prices than the present rates.
Fertiliser minister Ram Vilas Paswan was also against the formula. According to him, the Reliance price was much above the government-controlled price of $2.5 mBtu that PSU power and fertiliser companies pay for the gas.