Reliance strikes back at 'cynical' politicians

Vol 17, PW 16 (27 Mar 14) People & Policy
     

Reliance has gone on a PR offensive to counter allegations it engineered India's new domestic gas pricing formula for its own benefit.

Reliance lost a minor battle this week when the Election Commission on March 25 ordered the government to delay a proposed increase in the gas price from April 1 to after elections. The move was instigated by AAP party leader Arvind Kejriwal, who during his 49 days as Delhi chief minister ordered a probe into Reliance chairman Mukesh Ambani and policymakers over gas pricing.

However, in a series of press releases this month (March) Reliance vigorously defends an increase in the gas price from $4.2/mmbtu to $8/mmbtu or more, countering claims it will hit the ‘common man’. Reliance says even at $8/mmbtu domestic gas will be $10 cheaper than imported LNG.

More, increased royalty and taxes to the government from domestic gas sales will be higher than subsidies needed for the fertiliser sector. Besides, says Reliance, only 5% of India's power is generated by gas.

ONGC and Oil India, producing 70% of India’s gas, have more to gain than Reliance, it adds. ONGC alone will earn an extra Rs16,000cr/year ($2.6bn).

"The fact is that the country will stand to lose Rs120,000cr/year ($20bn) if gas prices aren't increased as gas (LNG) must then be imported, benefiting foreign companies," says Reliance.

LNG Summit