The government, on Wednesday, announced the constitution of a committee under the chairmanship of C. Rangarajan, Chairman, Prime Minister's Economic Advisory Council, to review the existing production sharing contracts (PSCs) in light of the recent spat between Reliance Industries Ltd. (RIL) and the Petroleum Ministry.

The review comes after the Comptroller and Auditor General (CAG) in its draft report had asked the Petroleum Ministry to carry out a comprehensive review of the PSCs to protect the interests of the Government.

According to an official statement here, the Committee would carry out a review of the existing PSCs, including in respect of the current profit-sharing mechanism with the pre-tax investment multiple (PTIM), as the base parameter and recommend necessary modification for the future PSCs

It will also explore various contract models with a view to minimising monitoring of expenditure of the contractor without compromising, firstly, on the hydrocarbons output across time and, secondly, on the government's take; suggest a suitable mechanism for managing the contract implementation of PSCs which is being handled at present by the representation of regulator/government nominee appointed to the Management Committee and come out with suitable governmental mechanisms to monitor and to audit Government of India (GOI) share of profit petroleum.

The committee will look into the structure and elements of the guidelines for determining the basis or formula for the price of domestically produced gas, and for monitoring actual price fixation; and any other issues relating to PSCs.

The committee has been asked to submit its recommendations by August 31.

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