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Home News Power Sector News CAG to study the profits for Reliance from recent gas price hike

CAG to study the profits for Reliance from recent gas price hike

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CAGThe cabinet's decision to double the price of natural gas from $4.2 per million metric British thermal unit (mmBtu) to $8.4 per mmBtu from the next financial year may be reviewed by the Comptroller and Auditor General (CAG) to ascertain how much profit Reliance Industries Ltd (RIL) would stand to make in the Krishna Godavari D-6 basin.

The CAG is currently auditing RIL's KG D-6 basin up to 2011-12 but sources said its scope of audit could include decisions taken by the government that would benefit the private player and a presumptive loss to the exchequer.

Sources said in KG D-6, most of the cost had been recovered by the private player and the increase in price would only go as profit. About 90% of receipts from K-G D-6 were so far booked as expenditure and in the remaining 10%, only 1% was paid to the government and rest 9% went to the operator as profit.

The capital expenditure claimed so far by RIL has been more than $5 billion. There was a dispute between the company and the auditor with the former saying the government auditor had no mandate to ask for "proprietary expenditure" and from where these purchases were made, resulting in stalling of the audit for some time.

The auditor had earlier asked RIL to disclose how 90% proceeds from sale of gas was spent, seeking details of all procurement made by the company.

The decision to raise gas price has been opposed, with Left parties saying this would only benefit a corporate house. Calling it irrational, the CPM said the move was meant to "subsidize the profits of a powerful corporate house" and would have a cascading impact on prices of fertilizer and electricity.

It gave examples of how gas prices were low internationally. "In Gulf countries, the price is only $1 per mmBtu, in Egypt $2.57, in Nigeria $0.11 and in Indonesia around $1," a statement by the party said.

Source- TOI

 

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