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New Delhi orders probe on gas pricing

Feb. 12, 2014 at 2:58 PM   |   Comments

NEW DELHI, Feb. 12 (UPI) -- New Delhi's government called for a criminal probe of charges against federal oil minister Veerappa Moily, Reliance Industries Ltd.'s Chairman and Managing Director Mukesh Ambani and others following complaints of irregularities in the pricing of natural gas in the Krishna-Godavari basin.

The capital city's chief minister Arvind Kejriwal said Tuesday the Anti-Corruption Branch of the Delhi government was asked to probe the issue based on complaints filed by former Cabinet Secretary T.S.R. Subramanian, former Navy chief Adm. Tarun Tahiliani, a lawyer and a former expenditure secretary, Press Trust of India reports.

The issue relates to the federal government's plans to allow producers to increase the price of natural gas to around $8 per million metric British thermal unit from the current price of $4.20, from April 1.

Kejriwal said the complaint alleged "collusion between some union ministers and Reliance Industries Ltd." that purportedly resulted in the decision to double the gas price.

Kejriwal alleged that Reliance did not produce adequate gas from its Krishna-Godavari block in order to put pressure on the government to hike the price, Press Trust reports.

But Reliance has said that its output from that block has fallen because extracting the gas had been more difficult than anticipated, reports the New York Times.

In a statement Tuesday about the probe, Reliance denounced the "irresponsible allegations," saying it would "resort to the available legal remedies to protect our reputation and preserve the pioneering efforts and investment" made by the company.

"We also remain fully committed to the development of oil and gas sector in India within the parameters of law," the statement said.

The Financial Times last month cited Bernstein Research as saying that Reliance Industries could increase its production of natural gas to almost double current levels by 2018 under India's new gas pricing formula, bringing the company's output to 50 million standard cubic meters every day.

India Ratings & Research said in a report last year that the gas price increase would raise costs for power utilities by about $1.3 billion a year, potentially pushing up electricity tariffs by more than 50 percent.

"The Indian power industry, a major consumer of natural gas, mostly operates on the principle of pass-through of fuel costs to consumers," the report stated.

"If gas prices are hiked to $8 this April, there will be chaos among the people of this country," Kejriwal told reporters Tuesday, the Wall Street Journal reports. "It will become impossible for the common people to live."

In October 2012 when Kejriwal was an anti-corruption activist, he accused Reliance of receiving favorable terms from the Bharatiya Janata Party-led coalition government in 2000 to extract gas from the Krishna-Godavari Basin, says the New York Times report. Reliance had denied those accusations.

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