Deora view triggers Anil tirade
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- Published 3.08.09
New Delhi, Aug. 3: Anil Ambani today slammed Reliance Industries for hoarding gas by producing less than it was supposed to from the gasfield in the Krishna-Godavari basin, which is at the centre of a raging dispute with brother Mukesh.
In a conference call today — just hours after petroleum minister Murli Deora put up a spirited defence in the Lok Sabha of the government’s decision to intervene in the case before the Supreme Court — Ambani said RIL was creating an artificial gas shortage in pursuit of its “narrow profit-driven motives”.
Ambani also criticised Deora for suggesting in Parliament that gas was a scarce commodity — which, he said, was no longer true. “The gas shortages of the past are going to be the gas surpluses of the future,” he said while seeking to repudiate the assertions that Deora had made in the House.
Deora had informed the House that the current output from the KG-D6 gasfield was just 31 million cubic metres of gas a day and would rise to 80 mmscmd within a year.
Anil said he was surprised to learn that gas production would go up to 80 mmscmd only next year. The petroleum ministry itself had said earlier that the KG-D6 gasfield could attain that production level by June this year — one of the principal reasons why it had approved the capital expenditure of Rs 45,000 crore back in 2006.
The younger sibling said Reliance had no justification to lower production from the targeted levels and said it was doing so only to justify a high gas price of $4.20 per million British thermal unit (mBtu) at a time when global gas prices had plunged 80 per cent.
He argued that RIL had lowered production because there was no “demand at the present exorbitant price of $4.20 per mBtu at the wellhead” which translated into “an astronomical delivered price of nearly $7 per mBtu”. An RIL subsidiary is charging $1.25 per mBtu for delivery of the gas. Under the agreement with RNRL, the Mukesh Ambani company is supposed to get only 72 cents for gas transportation.
Anil demanded an independent investigation by public accountability bodies such as the Comptroller and Auditor General and the Central Vigilance Commissioner into the capital expenditure costs of the gasfield.
The suggestion was that RIL had padded the costs to justify the high price of gas. Anil indicated that there was an even more sinister design: since the production sharing contract with the government allows RIL to recover the entire costs before it shares profits with the former, the government stood to potentially lose Rs 30,000 crore in revenues.
Deora told Parliament that the petroleum ministry, which has been accused of adopting a biased and partisan stand in the gas dispute between the Ambani brothers, had nothing to do with the private dispute between two industrialists.
“However, we have everything to do with protecting the interests of the government and public interest,” Deora said.
Anil hoped that the petroleum minister’s statement that it would not interfere in the dispute between two industrialists “would become visible in the petroleum ministry’s stand before the Supreme Court”.
Deora said the government would allocate gas to Anil Ambani’s power plant at Dadri once it came up. Ambani riposted that RIL had scuttled his plans for the Rs 20,000-crore power plant by refusing to enter into a bankable gas supply agreement with him. Banks refuse to fund large projects that do not have a viable and cost-effective feedstock supply programme.
Anil said the government should insist that NTPC took effective steps to assert its right to gas from the KG-D6 gas field at $2.34 per mBtu, which was the benchmark price for the gas supply agreement with RNRL. He claimed NTPC could also lose Rs 30,000 crore if it did not aggressively protect its interests.
Deora’s statement on the KG gas row between the Ambani brothers and the government’s role in the issue rocked the Lok Sabha resulting in two adjournments of the House.