Party member Tapan Sen urges Manmohan to review contract
Accusing the Mukesh Ambani-owned Reliance Industries Limited (RIL) of scaling down production of gas in the KG D6 field in a calculated manner, the Communist Party of India (Marxist) has urged Prime Minister Manmohan Singh to intervene and review the contract of RIL for the KG basin in the interest of the nation as it had already caused a loss of Rs. 15,000 crore to the exchequer.
In a letter to Dr. Singh on Monday, CPI(M) Rajya Sabha member Tapan Sen said: “It is expected of the contractor handling the natural gas reserve to scale down the production of gas in KG D6 as pressure tactics for achieving premature price rise from the government But at the same time, it is also expected that the government would appropriately respond to such coercive tactics and decide whether the field should continue to remain at all under the very contractors in perpetual default…in the matter of production commitment. I understand the government is very much empowered to make such review under the terms of the contract. And I believe, such a review is warranted in the interest of the nation.”
Mr. Sen pointed out that production of natural gas from KG D6 had come down from 45 to 38 mmscmd vis-à-vis the contractual commitment of 70 mmscmd. “This, you will appreciate, has caused a direct loss to the country's energy economy of around Rs. 15,000 crore even going by the most conservative estimate, if only the cost differential of alternative feedstock by the gas consuming sector is taken into account. The indirect loss, obviously, is much more.”
Referring to his letter dated October 10, 2011 to Dr. Singh requesting to get natural gas pricing methodology critically examined by the Comptroller and Auditor-General (CAG) as there has been an upsurge in price of indigenously produced gas without any linkage to its actual production cost, he said the price was decided by the EGoM constituted for the purpose.
Mr. Sen said: “Unfortunately, I am not aware of any action being taken in that regard although the same had been an urgent necessity. Almost simultaneously and disturbingly enough, it is learnt that demand for further raising the price of natural gas is being made by the major contractor in KG D6 field. And such demand is also accompanied by a calculated scaling down of production in violation of the contract on a non-verifiable plea of geological complexity.
“I, therefore, urge upon you to please appreciate the gravity of the issue and intervene so that the entire contract related to KG D6 is reviewed in view of serious default committed by the contractor.''
Accused of indulging in pressure tactics
Charged with causing Rs. 15,000-cr. loss to the exchequer