Andhra wants first use of K-G basin gas

Earlier, Andhra’s energy department had also written to the Ministry, opposing the recommendations of the pricing committee on natural gas. On Friday, the pricing committee of the ministry announced the mechanism to determine the price of domestically produced gas, allowing producers to sell gas at a price determined through a competitive bidding process, something the state opposes.

The timing is also important since it comes ahead of the crucial Prime Minister’s energy coordination committee meeting, which is to be held this month-end and which will discuss the government’s gas pricing policy.

The Andhra government does not want pricing of gas to be left to market forces and has been lobbying for a regulatory body to decide the price. “The basic interest of the state government is to ensure that adequate gas required in the state is made available at reasonable rates. This, therefore, means that no portion of the gas from the K-G basin can go outside without first meeting the entire requirements of the state,” says an Andhra government note.

It further says that the state should ensure that since RIL agreed to supply K-G basin gas to NTPC in Gujarat at $ 2.97 per million btu, the government should insist that the supply price of power generation for Andhra should be lower, since transportation charges will be negligible.

RIL aims to produce 80 million standard cubic metres of gas a day (scmd) by mid-2008. The Andhra government, on the other hand, has estimated that the state’s requirement will be around 83.27 million standard cubic metres per day (scmd) by 2010.