MOILY SEEKS TO RAISE GAS PRICE TO FAVOUR RIL: CPI
Friday, 24 May 2013 | PNS | New Delhi
Alleging that Petroleum Minister Veerappa Moily is out to favour Mukesh Ambani’s Reliance Industries Limited (RIL) by trying to increase the price of gas from KG Basin, the Communist Party of India (CPI) on Thursday sought the Prime Minister’s immediate intervention in the matter.
Addressing the media in the Capital, CPI National Secretary Gurudas Dasgupta demanded Moily’s resignation for “facilitating” Mukesh Ambani in looting national assets by ignoring suggestions of the Fertilizer and Power Ministries against increasing the price of gas.
Producing documents and Cabinet notes, the veteran CPI leader alleged that certain Cabinet Ministers, led by Moily, were trying to increase the price of natural gas from $4.2 per mmbtu to $14 per mmbtu (Million Metric British Thermal Units), as desired by Mukesh Ambani’s RIL.
In his detailed letter to Prime Minister Manmohan Singh, which was released to the media, Dasgupta pointed out that disregarding the objections of the two Ministries of Fertiliser and Power would prove disaster. He said all the suggestions of the Finance Ministry, the Planning Commission and even the recommendation of the Rangarajan Committee should be discarded in the interest of the nation.
“This is a gigantic scam that is in the process of being enacted through the generous assistance of the Petroleum Ministry. This is loot of the country’s natural resources which will cause deepest anger in our people. This is the biggest crime if it is allowed to happen,” the CPI leader stated in his letter to the PM seeking a pre-emptive action for the sake of the country.
Dasgupta pointed out that even the Rangarajan Committee, comprising eminent personalities appointed by the PM, had recommended the price of the natural gas to be “at least eight dollars per mmbtu. “This figure is a very huge one and cannot be acceptable. The Power Ministry had already said that at this price, power generation would not be possible and would lead to increase in power tariff in the country,” he said.
Dasgupta pointed out that Fertiliser Ministry’s suggestion would help decrease the price of the gas. But a big lobby is working for Reliance to ignore this detailed formula, he claimed.
“One would have expected that Ministry of Finance and the Planning Commission will balance the interest of the users and the producers by suitable modulating the Rangarajan Committee’s formula downward. However, to my utter dismay, they have actually suggested formulations that are closer to the demand of RIL and so far, more than what has been envisaged by the Ranagarajan Committee,” Dasgupta pointed out to the Prime Minister in the letter.
He blamed Planning Commission for recommending the Government to switch to international pricing formula “as desired by Mukesh Ambani.” The veteran CPI leader said the things were going in a way to provide huge benefits to RIL in collusion with the Petroleum Minister Moily.
“It is regrettable that the Petroleum Ministry is just copying and pasting the suggestions of Reliance. If the demand of Reliance to increase the gas price from 4.2 dollars to 14 dollars is accepted, in five years the public exchequer would suffer a subsidy of Rs 1,80,000 crore and Reliance will pocket an additional profit of Rs.1,62,000 crore,” said Dasgupta, accusing the Petroleum, Finance Ministries and Planning Commission for facilitating the demands of RIL.
http://www.dailypioneer.com/todays-newspaper/moily-seeks-to-raise-gas--price-to-favour-ril-cpi.htmlPRESS INFORMATION BUREAU
GOVERNMENT OF INDIA
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Petroleum Minister Refutes allegations regarding Proposed Gas Price Revision
PRESS NOTE
This is with regard to media reports based on press briefing by one of the Hon’ble Members of Parliament regarding proposed revision in gas pricing. The issues highlighted in these reports and some baseless allegations made by the Hon’ble Member are not only devoid of merits but are malicious and based on distorted facts. In order to put the record straight, the following facts are briefly highlighted.
The Government of India constituted a Committee under the Chairmanship of Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister in May, 2012 to suggest structure and elements of the guidelines for determining the basis or formula for the price of domestically produced gas in India . The Committee submitted its Report in December, 2012 and the Ministry of Petroleum & Natural Gas is in the process of finalizing a Cabinet Note to be placed before the Cabinet Committee of Economic Affairs for a decision on the recommendations of the Dr. Rangarajan Committee. The proposed guidelines will be effective from 1st April, 2014 for pricing of domestic natural gas based on the methodology suggested by Dr. Rangarajan Committee, consequent to the approval by the CCEA. It is needless to emphasize that views of the other Ministries and Planning Commission shall be part of the proposed Cabinet Note and will be placed before the Cabinet for consideration. The proposed pricing guidelines shall be equally applicable to both the private and public sector companies engaged in production of natural gas. It may also be highlighted that more than 60% of the natural gas in India is still produced by the Public Sector Companies. Therefore, the allegation that the price is being revised for the benefit of the private sector is completely misconceived.
Majority of the gas presently under production are pertaining to the blocks allotted under various rounds of NELP and governed under the Production Sharing Contract (PSC) signed between the Government and the producers. The PSCs provide for sale of gas at competitive arm’s length price to the benefit of parties to the contract and that the gas price formula or basis on which the prices shall be determined, shall be approved by the Government. The proposed guidelines based on the methodology suggested by Dr. Rangarajan Committee is aimed at fulfilling the above mentioned contractual obligation under the PSC.
The indigenous production of oil and gas in India has not been able to produce the expected results and therefore, the country is heavily dependent on import of petroleum products which has a huge bearing on the fiscal imbalance. In the year 2012-13, the average natural gas production was about 111 mmscmd as against a requirement of approximately 286 mmscmd. The gap between the demand and supply is likely to get further widened during the 12th Five Year Plan, if effective steps are not taken expeditiously to enhance the domestic production. The annual import bill for import of oil and gas is approximately 160 billion US $ (more than 7.00 Lakh crores). The estimated financial outgo on account of import of natural gas is likely to increase to 17.82 billion US$ in 2016-17 from 8.79 billion US $ in 1012-13. Apart from its impact on the fiscal imbalance, heavy dependence on import also increases the subsidy burden for Power and Fertilizer sector. The natural gas is imported in India at more than 14 – 15 dollars per mmbtu which is more than double the proposed revision in gas price. As such the subsidy outgo for Fertilizer and Power will be 2 to 3 times more if these sectors remain dependent on imported LNG. In addition, huge installed capacity in the Power Sector is lying idle for want of gas which has severe cascading effect on the national economy. Therefore, the choice is between import of LNG at a much higher price and the relatively cheaper domestically produced natural gas. Moreover, the enhanced domestic production will also provide great boost to the national economy.
Gas prices in India , therefore, can incentivize investment in the Indian upstream sector so that the production in India reaches optimum levels and all explorable reserves are put to production expeditiously.
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Ministry of Petroleum and Natural Gas
New Delhi, May 24, 2013