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The government has prepared a detailed defence of its decision to raise gas prices and has ruled out termination of Reliance's contract for the controversial KG-D6 block as the Prime Minister has acted quickly to counter Arvind Kejriwal's allegation that raising gas rates was a corrupt decision.

Prime Minister Manmohan Singh had asked oil minister Veerappa Moily to respond to a letter Kejriwal wrote to the government demanding that gas prices should not be increased until the completion of the anti-corruption case he had ordered when he was chief minister. The case was registered against Mukesh Ambani, Moily and former minister Murli Deora on the basis of allegations that cabinet ministers colluded with Ambani to raise gas prices steeply. Kejriwal wants the government to terminate the KG-D6 contract for non-compliance.
Moily has put together the facts of the case and drawn from the contract with RIL to defend the decision, government officials said. He has challenged Kejriwal's claim that cost of producing gas from the deepwater field is less than $1 per unit. While RIL says it does not calculate the cost and profit of specific fields, Moily said that ONGC had estimated its cost of producing gas was $3.6 per unit in 2012-13, and in some case it was more than the current price of $4.2.

Source-On Request