CPI's Dasgupta questions $8.4 an mBtu gas price

Asks govt to revisit pricing of natural gas as per Rangarajan formula that would be applicable from April 2014

Communist Party of India (CPI) leader Gurudas Dasgupta on Thursday again trained guns on the Centre for the gas price rise.

In a letter to Prime Minister Manmohan Singh, Dasgupta alleged the cost of production for Reliance Industries Ltd (RIL)’s KG-D6 block was just $ 2.74 a million British thermal unit (mBtu). He added the Rangarajan pricing formula would give them a windfall gain through a pricing of $8.4 an mBtu.

Dasgupta asked Singh to revisit the pricing of natural gas by the Rangarajan formula, applicable from April 2014. Citing petroleum ministry figures, Dasgupta said the ministry had admitted that after computing from the financial statement of RIL in 2011-12 on projected level of production, the cost of production, including levies, worked out to $2.74 an mBtu.“If the cost of production is only $2.74, how has Rangarajan come to the conclusion that it should be $8.4 per unit to be given to the contractor? Evidently, it is a case of lack of due diligence,” the letter said.

Earlier, Dasgupta had filed a public interest litigation regarding the decision on gas pricing at the apex court, on which the response from the petroleum ministry, RIL and minister M Veerappa Moily would be heard on September 6.