Within 10 days of assuming power at the Centre, the BJP-led NDA Government seems to be showing a strong intent of taking quick decisions on several outstanding issues, as top Government sources have indicated that a decision on implementing the increased natural gas price regime is likely to be taken before July 1. Under the new price regime, natural gas prices are to double from $4 per mmBtu at present to $8 per mmBtu.
Giving indications of a sudden change of gears within the Government, highly placed sources pointed out that dealing with the concerns arising out of the subsidy burden (on selling lPG and kerosene at less than market price) as well as preparing guidelines which can be beneficial to both the Centre as well as the explorer while auctioning oil and gas blocks under the 10th round of NElP (New Exploration licensing Policy), are the other two significant aspects on which the Government is likely to take a final call within a few weeks.
Sources privy to the development indicated that with July 1 not very far away, and with the gas price hike being an issue which “needs to be looked at and needs (urgent) attention”, the Petroleum Ministry could approach the Cabinet as early as next week on it.Clarity on the matter, they added, could come by early next week as this is one of the key issues on the agenda of the Petroleum Ministry as part of its 100 days roadmap.
The new gas price hike - which had been suggested by a panel headed by the former RBI Governor C Rangarajan - was to come into effect from April 1, 2014. However, owing to lok Sabha elections the then Petroleum Ministry M Veerappa Moily had deferred the decision of its implementation till after May, looking at the political ramifications it would have had.
Under the Rangarajan formula, gas is to be priced at an average of international hub prices and the rate at which India imports lNG. If this comes under implementation, the price of natural gas will double to $8 per mmBtu from the existing $4 per mmBtu.Sources further said that Reliance Industries ltd (RIl), which has been selling gas at the existing price (produced from its eastern offshore KG-D6 fields, has been asked by the Government that “the earliest possible date for applying the revised (new) price is July 1”, accordingly a decision has to be taken before that date.
Whether any fine tuning is required in the formula suggested by Rangarajan panel, especially keeping the interests of the fertiliser and power sectors in mind, is something which could be decided in the Cabinet, sources said.Meanwhile, other issues like enhancing production of oil and gas, taking a final call on modifying the production sharing contracts (PSCs) documents (which will ensure a win-win situation for both Government and explorer while giving out blocks under NElP-X), and dealing with the tricky issue of subsidy burden, are some of the other key issues which have been put up by the Petroleum Ministry on its presentation that will be unveiled before Modi.
The Petroleum Ministry has prepared a list of the aforementioned issues at a time when it along with other ministries, is expected to make a presentation before Prime Minister Narendra Modi on the key issues which need to be expedited within the next 100 days. The meeting is expected to take place next week.
In fact the presentation meeting could take place by next Monday, sources indicated, as during this meeting the ministry is expected to get a clear direction from the Prime Minister on the gas price issue, and then it could be presented before the Cabinet later next week.Secretaries of all the ministries would be making 10-minute long presentations before Modi during the proposed meeting.