New EGoM to look at K-G gas supply details

With Reliance Industries Ltd limiting gas output from its Krishna-Godavari Basin block due to lack of government-identified customers, the union government has constituted yet another empowered group of ministers to look into the issue, petroleum minister Murli Deora said yesterday.

The EGoM will as usual be headed by finance minister Pranab Mukherjee. Besides Deora, it would comprise power minister Sushilkumar Shinde, fertiliser minister M K Alagiri, law minister Veerappa Moily, and Planning Commission deputy chairman Montek Singh Ahluwalia.

RIL, which is operating the K-G gas block after discovering it, is restricting gas output to 40 million cubic meters per day, despite having the capacity to produce 65 mscmd, since the government has yet to decide new buyers after the initial allocations.

"An Empowered group of ministers (EGoM) has been constituted," petroleum minister Murli Deora told reporters on the sidelines of an industry function here, but did not go into details of what it would discuss.

Deora had in late August requested the Prime Minister's Office for a new EGoM, but the formal constitution was delayed.

RIL is fighting a lawsuit with Anil Ambani Group firm Reliance Natural Resoruces Ltd over supply and pricing of gas from the K-G D6 fields. RNRL says it has an agreement with RIL to get natural gas from the field at a 44-per cent discount to the price set by the government in 2007. RIL says it cannot sell the gas at less than the government approved rate of $4.20 per mmBtu.

The previous EGoM, which ceased to exit with the installation of a new government in May this year, had allocated the first 40 mscmd of gas from KG-D6 to fertiliser units, power plants, city gas projects, LPG plants and the steel sector.

RIL has so far contracted gas supplies to 15 fertilizer firms, 19 power plants and three steel makers. It has also signed a gas sales and purchase agreement (GPSA) with GAIL for supply to its LPG plant and with Indraprastha Gas for city gas.