21 Aug : Government has noticed certain advertisements during the last few days published by certain shareholders of Reliance Anil-Dhirubhai Ambani Group in several newspapers across the country. After consideration of this in a meeting of Finance Minister, Law Minister, Power Minister and Petroleum Minister, it is considered necessary to issue the present Press release to correct the ongoing propaganda against the Government in matters, some of which are sub-judice in Courts. The Government is of the view that such an advertisement campaign on the eve of the hearing in the Hon’ble Supreme Court is most unfortunate.
An allegation has been made that in the contract of KG-D6 Project, the Government would get only Rs. 500 crores as against the contractor’s stake of Rs. 50,000 crores. This allegation is incorrect. Government expects to in fact realise about Rs. 84,000 crores. The recovery of the Government will be increased towards the latter part of the Project.
It has been alleged that the Ministry of Petroleum & Natural Gas is seeking to cause loss to NTPC. It is stated that the Ministry of Petroleum & Natural Gas is committed to protect the interests of NTPC by all means.
It has been alleged that the Project cost has been hiked from Rs. 12,000 crores to Rs. 45,000 crores. In November 2004, the estimated capital expenditure was US$ 2.45 billion which was revised in December 2006 to US$ 8.83 Billion. The said increase has taken place on account of various factors including increase in reserves by over 2-1/2 times, production facilities by 3 times, peak production by 2 times, increase in number of wells, field life and inflation in equipment and services industry. It may be noted that the figures are only estimates and cost recovery would depend on actual audited expenditure figures.
The fixation of price and allocation of gas has been undertaken pursuant to the decision of Empowered Group of Ministers. The price formula is based on the principle of ‘arm’s length’ and in accordance with the provisions of the production sharing contract (PSC). The price formula has been approved on 12th September 2007 which leads to a price of US$ 4.20/MMBTU of KG-D6 gas at current level of crude prices. The formula is fixed for 5 years.
The Government of India is committed to upholding the rule of law. It cannot enter into needless and unnecessary controversies. Suffice it to say that parties to a dispute would be well advised to reserve restraint in the matter of projection of facts as well as inferences. In view of the fact that the matter is sub-judice before the Supreme Court, the Government of India has issued the above limited clarification so that there is no element of public misinformation.