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| Anil attacks govt estimate of income from gas field |
| BS Reporter / New Delhi Aug 22, 2009, 01:04 IST |
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The Anil Dhirubhai Ambani Group (ADAG) has labelled the petroleum ministry’s estimates of income from Mukesh Ambani-owned Reliance Industries Ltd’s D6 block as wrong. The estimates are “like counting chickens before they hatch”, the group said in an e-mailed statement to Business Standard, in response to a news report carried on Friday.
Though so far ADAG has maintained that the increase in capital expenditure estimates of RIL and the directorate general of hydrocarbon’s approval of it would deny the government a major chunk of revenue, its e-mail quoted international analysts as saying that RIL’s actual capital expenditure was going to be even higher than the approved $8.84 billion.
“Credit Lyonnais-owned CLSA report dated 23rd June 2009 expects this to be 23 per cent higher, while Goldman Sachs report of 24th March 2009, which the Petroleum Ministry always quotes from, has stated that the final capital expenditure on gas alone is likely to cross $14 billion. This, incidentally, will be almost six times the original estimate of $2.47 billion for doubling production from 40 million standard cubic metre a day (mscmd) to 80 mscmd.”
“If one considers the initial period, the government is only entitled to 10 per cent share of profit petroleum, which, in turn, is itself only 10 per cent of the total revenues since 90 per cent of the initial revenues would go towards cost recovery. “Hence, the government will only get 1 per cent i.e. Rs 500 crore, while RIL gets Rs 49,500 crore,” said the mail.
The Business Standard report had quoted petroleum ministry estimates that the government would earn $17.8 billion from RIL’s D6 field, of which $9.2 billion was profit petroleum, $ 6.5 billion was taxes and $ 2.1 billion would be royalty over the field life of 13 years. ADAG maintained that inclusion of taxes in government revenue was erroneous, because “tax revenues do not arise out of production sharing contract but by the Finance Bill which is under the Finance Ministry”.
It said the government share “though based on futuristic assumptions of valuation price and capex” is only $9.2 billion (about $44,000 crore at the current exchange range”. “If the Goldman Sachs’ estimates are considered for capex, government revenue as profit petroleum will reduce from $9.2 billion to a paltry sum of $4.5 billion (Rs 22,000 crore) which is less than half of Petroleum Ministry’s misleading current estimates.”
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