KG basin gas pricing

The CPM on Tuesday asked the government not to accept the price formulation made by RIL for the gas produced from Krishna Godavari basin. The party, which said the issue of pricing should not be left to market forces, asked the Empowered Group of Ministers looking into the matter to decide on a price based on actual production costs and reasonable profit.

"RIL has proposed $4.33 per MMBTU, which is designed to ensure windfall profits for the private contractor for exploiting natural resources of the country. The present price formulation made by RIL in 2007 is in no way consistent with the price of $2.34 quoted by the same RIL in 2004 for supplying gas from the same KG Basin to NTPC through an international competitive bidding," the CPM politburo said in a statement.

It said even if the price quoted in 2004 through competitive bidding is indexed to the present, it can in no way allow an 85% hike as RIL has done while fixing the price at $4.33 MMBTU. "The RIL proposition on gas price is an artificially inflated one and should be rejected," the CPM said.