Government has right to formulate gas usage policy: Deora

The Bombay High Court directive that gas from Reliance Industries' fields be sold at rates 44 per cent lower than approved prices has implications on government's right to formulate and implement the gas usage policy, petroleum minister Murli Deora today said.
    
"Notwithstanding Government policies and the provisions of the Production Sharing Contract (PSC), the order observes the provisions of the (Ambani) MoU are binding on the parties," he said in a statement in the Lok Sabha.
    
The Bombay High Court had on June 15 directed Mukesh Ambani-led Reliance Industries to sell one-third of its peak output at rates which had been rejected by the government in 2006, and 44 per cent lower than current approved prices.
    
"We have nothing to do with the private dispute of the two industries or industrialists. However, we have everything to do with protecting the interests of the government and public interests," he said.
    
Government's gas utilisation policy, framed under the provisions of PSC for fields like KG-D6, advocates judicious use of the scarce national resource in the larger interest.
    
"This is our constitutional and legal obligation," he asserted. "We will make all endeavours to protect government's legal rights to regulate the utilisation of gas and its allocation."

Deora said the Ambani family MoU, as per the Bombay High Court judgement, provides that 12 million standard cubic meters per day gas would be given to NTPC, 28 mmscmd to Anil Ambani Group firm RNRL and the rest will be shared between RIL and RNRL in the ratio of 60:40.
    
"The MoU also stipulates that this share of gas will be applicable to gas not only from reserves of KG-D6 field, but also from other fields to be explored and operated by RIL, even consequent to future bidding by RIL," he said.
    
"Under the circumstances, it was necessary to file a Special Leave Petition (SLP) in the Supreme Court (seeking de-linking of gas from the family MoU) and accordingly action has been taken," he said. "I would not like to dwell further on the subject, as the matter is sub judice."
    
Deora said gas is a scarce commodity and the government would like to give gas to as many plants as possible. "But obviously, the first priority will be to supply gas to existing plants, which are not operating at all or are operating sub-optimally because of non-availability of gas."
    
Asserting that there was no discrimination against Uttar Pradesh, he said state-run NTPC's Dadri plant has been allocated 0.45 mmscmd of gas.
    
On RNRL's proposed Dadri power plant, he said "this plant is neither installed nor functional. There are many other plants which are in the process of being set up in different parts of the country."
    
Deora said gas would be allocated to Anil Ambani Group's proposed Dadri plant subject to its availability from KG-D6 fields. "Dadri plant will be treated on the same footing as other similar plants placed under similar circumstances."
    
He thrashed statements that the Government had not presented its case during the RIL versus RNRL gas dispute in the Bombay High Court saying it was on its request that the court had lifted the injunction on sale of gas from KG-D6.
    
"Government (had) placed before the court its submissions indicating its rights under the PSC, including inter alia the gas utilisation policy," he said.
    
The gas utilisation policy framed by an Empowered Group of Ministers (EGoM) allocated about 15 mmscmd of KG-D6 gas to
urea units which has helped the nation save Rs 3,000 crore in fertilizer subsidy.
    
Besides, about 4,000 MW of additional electricity is being generated from the 18 mmscmd gas allocated to power plants, he said.
    
"An additional about 25 mmscmd of gas needs to be supplied to the power sector to enable optimum operation of existing power plants and power plants to be commissioned in 2009-10, which would lead to additional generation of over 5,000 MW of power," he said.
    
Deora said the present cost of power plants lying idle or underutilised due to non-availability of gas prior to commencement of KG-D6 production was around Rs 36,000 crore.