NEW DELHI: The Communist Party of India(Marxist) on Tuesday asked the Centre to reject the “artificially inflated” price proposed by Reliance Industries Ltd. (RIL) for the supply of gas from its Krishna-Godavari basin reserve.
Joining the row over natural gas pricing in the wake of the ongoing tussle between Mukesh Ambani’s RIL and Anil Dhirubhai Ambani Group’s Reliance Natural Resources Ltd. that has moved the Bombay High Court seeking a gas supply agreement, the CPI(M) Polit Bureau has advised the Government to decide on the pricing based on “actual production costs plus reasonable profit.”
In a statement, the CPI(M) noted that the prices of natural resources such as gas should not be left to market forces. The Empowered Group of Ministers should intervene as artificially jacked-up prices would affect the viability of power and fertilizer units that plan to switch over to cleaner fuel.
The party said that the RIL’s current pricing formulation proposing to sell gas at $4.33 per million metric British thermal unit (mmbtu) was not in keeping with $2.34, the price it quoted in 2004 for gas supply to the public sector power major National Thermal Power Corporation.
“Even if the price quoted in 2004 through competitive bidding is indexed to the present, it can in no way allow an 85 per cent increase as the RIL has done while fixing the price at $ 4.33 mmbtu ,” the statement said.
The RIL’s gas price formulation is linked to international prices of crude oil and not to the cost of producing gas which is wholly a domestic product. The RIL proposal is designed to “ensure profit for the private contractor for exploiting natural resources of the country.”