Reddy and Chaturvedi block Reliance CBM price
Reliance is growing frustrated as oil minister Jaipal Reddy and oil secretary Girish Chaturvedi continue to delay approval of the CBM price it proposed in February, after a price discovery exercise involving fertiliser, power, ceramics, steel and other customers.
Reddy’s latest delaying tactic is to suggest that a Committee of Secretaries decide the price - a move rejected last week by cabinet secretary Ajit Kumar Seth. Still unclear is why Reddy and Chaturvedi are opposing Reliance’s LNG-linked price of $12.66/mmbtu plus $0.26/mmbtu ‘shipping freight’ for the expected 3.5m cm/d CBM likely to be produced from the Sohagpur East and West coalfields in Madhya Pradesh.
“(Cabinet secretary) Seth said the oil ministry should decide the price and not refer it to a committee of secretaries,” says a source. “The oil ministry is playing ‘ping pong’, tossing the decision back and forth and delaying it.
If they are unhappy they should have the guts to reject the price outright.” DGH and junior ministry bureaucrats support Reliance’s price proposal as it was carried out in line with strict PSC guidelines.
“Under the PSC, the ministry must approve or reject the price within 60 working days of its submission,” we hear. Reliance submitted its pricing formula to the ministry on February 21, four days after concluding the price discovery exercise which saw 59 valid bids received, equal to 70m cm/d demand.
Ministry officials sought clarifications on April 24. Reliance answered these two days later on April 26 but strangely, the ministry wrote to Reliance on July 12, repeating a previously answered query about $0.26 shipping freight.
Reliance replied on July 16 and has heard nothing since despite 20 reminders, the last sent on August 13.
