Gujarat demands lower LNG price from RasGas

Vol 8, PW 7 (30 Jun 04) Midstream & Downstream

Gujarat officials are desperate to improve the tainted image of their controversial chief minister Narendra Modi.

How else to explain their eagerness to seize on any available non-issue to extract political mileage Petronet-LNG is the latest target. Last week state energy and petrochemicals secretary Manjula Subramaniam publicly demanded that Petronet-LNG renegotiate the purchase price of its LNG from RasGas.

Subramaniam was speaking at the launch of a power plant in Ahmedabad. If Gujarat gets gas at more competitive rates we can promise to consume all of Petronet LNGs supply, she said.

But even our own Gujarat State Petroleum offers gas cheaper than Petronet-LNG. Subramaniam argued that the state government has taken the initiative to lower local sales tax on natural gas from 20% to 12% and that, now its the suppliers turn to offer a more reasonable price to consumers.

Gujarat is Indias second most industrialised state after Maharashtra and is expected to consume 60% of all the LNG that GAIL, Indian Oil and Bharat Petroleum sell on behalf of Petronet-LNG. Unsurprisingly, Petronet-LNG dismisses Subramaniams rhetoric as a political stunt.

What else could she do asks a senior Petronet-LNG source. The statement was not directed at us but at the 2,000 people in the audience.

Gujarat wants Petronet-LNG to match its price with Reliances $2.97 per mmbtu bid for NTPC. Why dont people understand that one cannot compare indigenous natural gas with imported LNG he adds.

Unlike imported LNG, there is no need to regassify domestic gas or add high sea charges to the delivered price. Yet Subramaniam, who is also chairperson of Gujarat Electricity Board, insists that the $3.6 per mmbtu for Dahej LNG is too high.

Another official explains her concern over the high price of imported LNG in the context of a bankrupt electricity sector. We might have a lot of gas in Gujarat, he said.

But our problems with electricity pricing are never ending.

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