Date:08/12/2006 URL: http://www.thehindu.com/2006/12/08/stories/2006120803640600.htm

Andhra Pradesh

A.P. yet to sign MoU with Reliance on gas price

Special Correspondent

Government asks the company to quote price first

HYDERABAD: Even as gas shortage is clearly foreseen for Andhra Pradesh, the signing of an MoU by the Government with Reliance Industries Limited (RIL) for supply from its find in the Krishna-Godavari basin may suffer delay due to differences over price.

At a recent meeting with RIL representatives, Chief Secretary J. Harinarayan extracted an assurance that the State's needs projected at 40 MCMD (million cubic metres per day) would be fully met before the gas from this find was taken to others. The RIL wanted to sign an MoU to this extent but it could not be signed, with the Government insisting on the company to quote the price first. The RIL promised supply from the find from July 2008.

The Government is of the view that price holds the key as to whether the State stands to gain out of the Reliance's off-shore find as popularly believed. It is insisting on a price of $ 3.3 per MMBTU (million metric British thermal units), the rate at which ONGC-Cairns consortium supplied gas their Ravva Fields before increasing it to $ 4.5 per MMBTU in September. While gas users, especially power projects, are fearing that the price may go up to $ 6 per MMBTU in future, an "administered price" is being worked out by the Centre.

Energy Minister Mohd. Ali Shabbir told reporters here on Thursday that the State Government had cut short its purchases from Ravva, protesting against the hike by the ONGC-Carins. He said the Centre was veering around the AP Transco view that the hike was unjustifiable as three was no fresh investment made into Ravva Fields.