Union petroleum ministry is examining the proposal of the Finance Ministry to ask Reliance Industries (RIL) to sell natural gas at lower rates ($4.2 a unit) for the supplies it still owes.
In a recent letter to the petroleum ministry, the finance ministry suggested that the government must subject gas producers to closer regulation, especially on the aspects of cost recovery and technical parameters related to production.
However, the timing of the Finance MinistryÂ’s letter has raised questions within as well as outside the government.
For one, why was the matter being raised after the Cabinet Committee on Economic Affairs (CCEA) took the decision in June on domestically produced gas price?
Also, the CCEA note was deliberated upon by all the key Ministries, including Finance, so why was this not suggested then?
Against a supply commitment of about 61 million standard cubic metre a day (mmscmd), the D6 block is currently producing 13.9 mmscmd. The output from the largest fields in the block (D-1 and D-3) after hitting a peak of 60 mmscmd in 2010 has been constantly declining.
The output from the block is expected to increase from 2017-18. The government has come in for criticism for its decision, as this could result in an increase in gas prices and Reliance was being seen as the largest beneficiary.