International BusinessGovt can save more on subsidy if gas is priced lower: ADAG
Anil Dhirubhai Ambani Group (ADAG) today said the government can save over Rs 5,000 crore in fertilizer subsidy if natural gas from Reliance Industries (RIL) operated fields are priced at $2.34 per mmBtu.
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Referring to the statement by Petroleum Minister Murli Deora in Parliament today on RIL gas price of $4.2 helping save Rs 3,000 crore in fertilizer subsidy, a top executive of the group said the savings could have been substantially higher if the gas rates were lower.
The $2.34 per mmBtu is the price RIL quoted in an international competitive bid called by NTPC, J P Chalsani said in a conference call.
"Under this scenario, while government achieves lower subsidy in fertilizer sector, it can also completely protect its profit share by maintaining the valuation price at $4.20 per mmBtu," he said.
Chalsani claimed that even through the international crude oil prices have come down by over 55 per cent and gas prices by over 75 per cent, the price of RIL gas has gone up by over 20 per cent in rupee terms as the price was denominated in US dollars.
He again accused RIL of "hoarding the gas" by producing less and quoted from the reports of the Cabinet Secretary and Prime Minister"s Economic Advisory Council"s of August 2007 to say that RIL gas price formula suffered from infirmities.