CPI-M rejects RIL gas price, Paswan calls for rebid

New Delhi: The CPI-M on Thursday demanded rejection of the approval given by an Empowered Group of Ministers to Reliance Industries' gas price, saying the fuel price should be based on actual cost of production.

"Inspite of serious objections raised in and outside Parliament as well as opposition from the power and fertilizer ministries, the EGoM has reportedly permitted RIL to fix a highly inflated gas price of 4.2 dollars per mBtu, which is a token reduction from the original price of 4.33 dollars per mBtu," the CPI(M) said in a press release.

"RIL formulation for gas price agreed by EGoM is based on the linkage with international price of crude oil and not with the actual cost of producing gas in the country. There is absolutely no justification for such linkage which is being made only to find a route to artificially inflate the price for windfall gain of the private company," it said.

The party demanded that the gas price should be based on the actual cost of production with a reasonable profit. "The pricing cannot be left to the so-called market forces based on import parity only to encourage super profit to investors."

It said the government had weakened the case of NTPC, which is fighting a legal battle against RIL. The private firm was obligated to supply gas from KG basin at rational price of 2.34 dollars per mBtu.

"The recommendation of the EGOM, should be rejected in public interest," the release added.

Fertilisers minister Ram Vilas Paswan has questioned the formula of RIL, calling it "unreasonable" while making a strong pitch to the ministerial panel looking into the issue for ensuring adequate supplies for the fertliser sector.

Paswan said bidding among select consumers, as done by Reliance, did not constitute arms-length pricing. "In my view, the price should have some relationship with the cost of production with a reasonable profit to the contractor," he said.

He also expressed concern about the availability of gas for fertliser units, saying the ministerial panel should get Reliance to commit itself to providing enough. He said RIL had indicated that it would meet the shortfall of gas-based fertiliser units (41 million cubic metres a day), arguing Rs 3,000 crore in subsidy could be saved by getting the corporate to fulfil its commitment.

With inputs from PTI