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Aam Aadmi Party (AAP) chief Arvind Kejriwal has made public letters written by the Gujarat State Petroleum Corporation (GSPC) to the Union Ministry of Petroleum and Natural Gas, seeking approval for a new pricing formula for gas produced from the Deen Dayal West (DDW) field in the K-G basin.
The link for the letters, written by GSPC Managing Director Tapan Ray to Petroleum Secretary Vivek Rae through the past year, is available on Kejriwal's Twitter account.
Earlier, Kejriwal had alleged the Gujarat government had asked the Centre to increase the price of gas from the K-G Basin from $4 a unit to $14 a unit. He had claimed this recommendation was aimed at granting a favour to the Mukesh Ambani-led Reliance Industries Ltd (RIL). Early this week, the Gujarat government had rebutted this, saying the AAP chief was "blatantly lying" to gain publicity.
According to the letters made public on Friday, in April 2013, GSPC had proposed a formula to fix the price of gas produced from the DDW field on the east coast of Andhra Pradesh. According to the formula, the price of gas would vary from $8.5 per million British thermal units (mBtu) to $14.2 an mBtu, depending on the Brent crude oil price. The lowest and the highest prices of Brent crude oil are $65/barrel and $110/barrel, respectively.
An emailed query to GSPC did not elicit any response.
On the rationale behind the gas price formula, GSPC states in the letter, "The proposed formula for pricing DDW gas represents an arm's length market price that meets all the requirements of price discovery. The discovered price maximises the government's share of profit, petroleum, royalty and taxes."
The company added the proposed formula was based on the competitive formula adopted for the sale of liquefied natural gas under long-term contracts. "This will enable us to execute the project and bring 5.24 mscmd (million standard cubic metres a day) of gas to the country's gas-starved markets," the letter said.
