Date:28/06/2007 URL: http://www.thehindu.com/2007/06/28/stories/2007062855820100.htm

Front Page

Gas prices: Chief Minister to mount “political pressure” on Centre

HYDERABAD: A day after his meeting with Anil Ambani of Reliance group to discuss the issue of gas prices, Chief Minister Y.S. Rajasekhara Reddy has decided to mount “political pressure” on the Centre to secure allocation of gas from Krishna-Godavari basin at prices determined by the Government.

Dr. Reddy will lead a delegation of State MPs from various political parties to New Delhi to explain to Prime Minister Manmohan Singh and Union Ministers concerned about the need to appoint an independent market regulator for pricing of natural gas that suits the State’s needs. The decision assumes significance as several representations made by the Chief Minister to cut the gas price failed to yield results.

Senior officials

The Chief Minister on Wednesday convened a meeting with senior officials of Energy and Industries departments to review the situation arising out of the reluctance of Reliance Industries Limited to supply gas at US $ 2.5 per MMBTU as requested by the State. In separate letters addressed to the Prime Minister, Dr. Reddy reiterated his Government’s commitment not to hike power tariff in the coming five to ten years.

Increase in gas price would have serious implications in that the additional financial commitment, if gas was priced at US $ 5.95 a MMBTU, would be Rs. 1,352 crore, marking 42 paise increase per unit.

The Government was not in favour of allowing some players making huge profits even if it meant bleeding other stakeholders dry. It had, therefore, rejected bids of GVK, Konaseema and three other companies outright as they quoted prices that would ultimately burden the State Government.

In another letter, he wanted constitution of a regulatory authority on the lines of power sector and the matter should not be left to the discretion of Director General Hydrocarbons.