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Days after the CCEA announced fixing of gas price for Reliance Industries (RIL), petroleum minister M Veerappa Moily said all roadblocks for the notification of gas price hike have been cleared and it will be notified any time soon. But while the price is hiked for bringing in foreign investors, they will now have to wake up to the revenue-sharing model, the new production-sharing contract, vehemently opposed by the operators. Moily told FE's Promit Mukherjee that the Nelp X round will be under the revenue-sharing model. Excerpts:
Is the price now announced final or are there still some loose ends to be tied?
We had taken a decision in CCEA on June 26 that was based upon the Rangarajan committee. We have accepted that and we will not go back on it. Now that price has been fixed for RIL also, it is final now.
What about requests from power and fertiliser sectors?
That is a different cup of tea. Ultimately we have to produce gas and that is our final objective. If you don’t produce gas then what happens? For example, the rate is $4.2 per mmBtu. If they (power and fertiliser) import it today, they will have to pay $14-15 per mmBtu and that is more costly. Now we need to invite investors. We have the resources, we have the reserves, whether it is shale or CBM or even offshore and onshore. The level of investment is not even 30% and shale is zero. Our north-eastern region is sailing in gas. We have to exploit all of that.
So there will be no rethinking on gas price for fertiliser and power sectors?
No, that is another matter. It is for the fertiliser ministry to work out and then take the subsidy from the finance ministry, like it happens now. You and everyone else should know that for every one billion dollar spent either by the private or the government companies, almost $500-600 million come back to the government.
When is the notification coming? Why has it been delayed so much?
The CCEA has taken a decision on December 20. No sooner the CCEA decision is communicated to the petroleum ministry by the Cabinet secretary, we will not take any more time. We will immediately notify it.
When do the Nelp rounds commence? It is being said that it will be delayed.
Now that the gas price is finally fixed for all, we will immediately notify it and then we will go full force with the Nelp X round. Out of the total 86 blocks that have been earmarked, 56 have already been approved by the various ministries, so we are going ahead aggressively with them.
We are trying our level best to clear more blocks. We have decided that on January 12 when the international oil and gas event, Petrotech, starts in New Delhi. We will announce the starting of Nelp X, which essentially means the bidding will commence from that day for the Nelp X round. There is no delay.
What about foreign participation in the current Nelp? In Nelp IX, there was hardly any.
I have spoken to many of the foreign operators and they had expressed their concerns. Some short-term measures are being taken to allay their fears and within a month, you will see several decisions being taken by the ministry, which will address their concerns. As of today, investors have become very optimistic about the petroleum sector.
What about the revenue-sharing model that investors had objected to and was one of the main concerns for investment in the oil and gas sector?
A move from the cost-recovery model to revenue-sharing model was one of the recommendations of the Rangarajan committee. There were issues related to deep and ultra-deep water explorations, which are being addressed now. But on Thursday, I have signed a Cabinet note to be circulated to all the ministries, which will eventually transform the current cost-recovery model to revenue-sharing. It will come before the Cabinet and approved very soon and the blocks under the Nelp X will fall under this model.
What is the amount of bank guarantee that RIL will have to pay to the government?
That needs to be calculated. The gas price will be hiked from April 1, 2014. At that time, what will be the weighted average cannot be anticipated today. On the basis of what the price is on April 1, the bank guarantee will be worked out.
Reliance Industries (RIL) had been talking to the government to allow them to retain 8 blocks that were a part of the area which the government had asked the company to hand over. What is the status on that?
We had asked Reliance to hand us back a certain portion of their acreage out of which most of it was given away by the company willingly. For the remaining eight blocks, five more have been relinquished and we are currently considering the remaining three also. Depending upon our discussions, we will take a final call.