Friday, February 13, 2009

Breach of LS Privileges by Deora- Alleges Left Front

Breach of LS privilege by Deora-I: Communist Party MP says petroleum minister knowingly misled House on gas pricing

Jan 26: Lok Sabha Member of Parliament Suravaram Sudhakar Reddy of the Communist Party of India (CPI) has moved a motion involving a breach of privilege against Petroleum Minister Murli Deora, alleging that he knowingly misled the House on two separate instances in respect of the government`s stance on the legal battle between RIL and RNRL over the sale and supply of gas from the D-6 field in the Krishna-Godavari Basin. Reddy had pointed out the following deviations in the affidavit filed by the government in the case vis-a-vis statements made by Deora during the course of his replies to questions raised in the House:8The contractor`s freedom to market gas is subject to restrictions envisaged under the Production Sharing Contract (PSC) provisions with respect to utilisation as well as pricing. It is always understood by the parties to this litigation that under the PSC, the contractor`s right to market the gas is subject to the approval of the price formula or basis by the government of India, as well as the gas utilisation policy of the government. --In reply to an unstarred question in the Lok Sabha on August 30, 2007, Deora had said that as per the PSC signed by the government under the NELP regime, the operators have the freedom to market the gas in the domestic market on an arm`s length basis. The government does not fix the price of gas. The role of the government is to approve the valuation of gas for the purpose of determining the government take. 8The Empowered Group of Ministers (EGoM) decision with respect to approval of the gas price formula or basis has not made any distinction between the contractor`s share and the government`s share of natural gas and is applicable to all the sales of natural gas to all the consumers. All the gas and not just the share of the contractor or the government shall be sold at a price which follows from the price formula or basis approved by the government, which in this case comes to $4.2/mmbtu. No distinction has been made in the government decision regarding its own share or the contractor`s share. --In replies to separate Lok Sabha questions on August 16 and August 23, 2007, Deora had stated that the PSCs provide for pricing of gas on the basis of sale on an arm`s length basis. The role of the government is to approve the valuation gas for the purpose of determining the government take. In order to provide transparency in approving valuations, the government formed a committee in August, 2006, to formulate guidelines for approving the natural gas price formula. Following extensive consultations with various stakeholders, including E&P operators, gas users and industry bodies, the committee submitted its report to the government, which has been accepted. (Click on Details for more information) Details

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