The Parliamentary Standing Committee on Finance has in its draft report urged the Government to take steps against Mukesh Ambani-led Reliance Industries limited (RIl) for the shortfall in the mandated production from KG Basin.
The panel, headed by senior BJP leader Yashwant Sinha, also recommended that RIl should not be awarded new price of natural gas till the company delivers the balance in production, as mandated in the contract.
“The Government must ensure that the contactor responsible for delivering the major chunk of gas from KG-D6 gas field supplies and delivers the shortfall he still owes as per the Agreement at old rate of $4.2/MMBtu, rather than getting the benefit of the new price for previous commitments,” said the panel’s draft report.
The report, expected to be tabled in the forthcoming session of Parliament, said the Government should take a decision on finding cost of production of natural gas by private operators and prevent manipulations in production.
It called for the need to meet the serious challenges that have arisen due to the tendency of contractors to manipulate the investment multiple parameter and controlling production, which adversely affected supply.
The panel’s draft report recommended for conducting “scientific cost study in the gas basins warranting/justifying a higher price. It cannot be a mechanism only leading to windfall/super-normal profits to entities, thereby putting the cost of private profit on society”.
The panel’s draft report also sought government to review and reconsider the controversial decision of doubling the price of natural gas from next year. And it questioned the rationale of Rangarajan Committee in deriving the price formula and urged for fixing the price in Rupee terms.
The report recommended for evolving a new Production Sharing Contract to “do away with the incentives to control production and manipulating investments, while assuring reasonable returns to the producers”.