Deora explains OilMin stand on gas row to PM

Calls on prime minister after PMO sought his ministry’s comment

Oil Minister Murli Deora today called on the prime minister to explain his ministery’s stand on the gas dispute between the Ambani brothers and how their family pact could affect government’s right to put the national resource to judicious use.

Deora met the prime minister for about half an hour and is believed to have explained in detail the part of the demerger agreement — which split the Dhirubhai Ambani empire between brothers Mukesh and Anil — that sought to appropriate the gas found in Reliance Industries’ KG-D6 and other fields between the firms run by them.

Sources in the know of the development said the minister, who has been under fire from the Anil Ambani camp for allegedly siding with the elder brother on the issue, explained how such agreements were in violation of the Production Sharing Contract and would set a wrong precedent for others.

The sources added that Deora told Singh his ministry had to petition the Supreme Court as the Bombay High Court had given effect to the family MoU and given the private agreement precedence over government’s right to formulate a Gas Utilisation Policy under the PSC.

The High Court had on, June 15, asked RIL to supply more than a third of peak output from KG-D6 fields to Anil Ambani Group’s Reliance Natural Resources Ltd at $2.34 per million British thermal unit, a rate 44 per cent lower than the government-approved price for fuel from the fields.

The petroleum ministry had last week written to the Prime Minister’s Office (PMO) on how the MoU was against public interest and flouts government authority.

The oil ministry communication was in response to comments sought by the PMO on a letter from Anil Ambani seeking a direction to the ministry to stop favouring RIL.

Deora today told the prime minister under Article 21.1 of the PSC, “natural gas (produced from areas like KG-D6) has to be sold as per the Gas Utilisation Policy of the government”, sources added.

An Empowered Group of Ministers, headed by the then External Affairs Minister Pranab Mukherjee, had gone into the whole issue of pricing and usage of RIL’s KG-D6 gas for almost two years and approved a Gas Utilisation Policy that allocated the scarce fuel among fertiliser and power firms, he told the PM.

RIL’s freedom to market as per the PSC is subject to the Gas Utilisation Policy outlining sectoral priorities and the pricing formula to be approved by the government.

Deora told the prime minister that several consumers and stakeholders such as Department of Fertilisers, Chief Minister of Andhra Pradesh and some power companies have expressed apprehension about the availability of gas in the wake of the Bombay High Court judgment.

The stakeholders’ representation asking government to take suitable action to protect the interest of consumers and assert its sovereign rights over the natural gas prompted the petition against the MoU in the Supreme Court, he told the prime minister.