Date:15/09/2007 URL: http://www.thehindu.com/2007/09/15/stories/2007091561101000.htm

Andhra Pradesh

Experts term gas price hike ‘unjust’

Special Correspondent

HYDERABAD: Experts in the power and gas sectors launched a tirade against the steep hike in the KG basin gas price of Reliance Industries Limited by the Centre, saying that the formula adopted to finalise the increase “was dubious.”

They sought a re-look into the issue with the contention that the price fixed by the Group of Ministers was “anti-consumer” as it would escalate prices of power, fertilizers, steel products, etc.

K. P. Rao, ex-member, Central Electricity Authority, said RIL had thrust the KG Basin gas price at $ 4.2 per mmBtu on the GoM after taking the decision itself. As the cost price of gas would be only $ 2 per mmBtu, the RIL would be left with a super profit of $ 2.2 per mmBtu. This would be collected from people. The RIL would recover its investment in one or two years. He criticised the RIL for “misleading” public with different figures on its capital outlay and gas reserves.

It may be recalled that the average gas price in case of power projects in the State, including transmission charges payable to GAIL, works out to $ 3.29 per mmBtu.

Objection

M. Thimma Reddy, convener, People’s Monitoring Group on Electricity, objected to RIL describing its price as “market-discovered”.

He said RIL did not involve the actual stakeholders in the State like power projects and fertilizer units while calling bids.

This was against natural justice because the RIL gas reserves lay off the Andhra coast. Moreover, the pipelines laid by RIL to take gas to Gujarat passed through the State.

A. Punna Rao, who served the erstwhile APSEB in various capacities, said the high gas price would push up the “variable cost” of power generation, placing a heavy burden on consumers. He termed the Central decision “unfair”.