With the gas price hike decision receiving all round flak from within as well as outside Government owing to its impending adverse impact on the fertiliser and power sectors, the Petroleum Ministry has claimed that while it would address the concerns of the fertiliser sector on top priority basis - as the hike will have a direct bearing on farmers - as per the Rangarajan panel formula, gas price in the first quarter of 2014-15 (when it becomes applicable) would come to around $6.83 per mmBtu.
Though the Government has been putting up a brave face over the past week since it okayed the controversial decision despite opposition from the Power and Fertiliser Ministries and even a section of Cabinet ministers, the Petroleum Ministry is in the midst of an intense firefighting mode to minimise the political damage. Sources said that Petroleum Minister M Veerappa Moily is of the view that all concerns of the Fertiliser Ministry about the decision having a spiralling impact on urea prices would be addressed on top priority basis, as the interests of farmers is at stake.
Moily, they added, is keen to ensure that the fertiliser sector is insulated from the hike in gas prices. Regarding the concerns of the Power Ministry on generation costs and electricity bills getting dearer owing to higher gas prices, the Petroleum Ministry is said to have indicated that their concerns would be addressed with the help of the Finance Ministry.
In fact the Petroleum Minister is even said to have ordered his officials to prepare a Frequently Asked Questions (FAQ) document, aimed at clearing all doubts about the move. The FAQ document would be distributed among all the stakeholders who are to be directly affected by the enhanced gas price from the next fiscal onwards, aimed at giving the clear picture behind the decision.
Sources close to the development said that the ministry is keen to give out a message that the decision has not been influenced by “external factors” or by the diktats of a certain corporate giant. Also the perception that owing to the implementation of Rangarajan Committee formula, the gas prices would double from the existing $4.2 mmBtu to $8.4 per mmBtu, should not be taken on its face value as for the April-June quarter of 2014-15, it would come to around $6.83 per mmBtu.
The ministry is further trying to portray that as the new price would be up for review after every three months, it would not necessarily mean that the gas costs would double. Sources said that in the Cabinet meeting held on June 27 when the controversial decision to hike gas prices was taken, several price slabs were floated and these were much higher than the price of $6.82 per mmBtu which had been suggested by the Petroleum Ministry.
Despite these backroom measures being initiated by the Petroleum Ministry, the negative reactions on the gas price hike decision seems to have even sent the Finance Ministry into self-evaluating mode. As per informed sources, Finance Minister P Chidambaram is said to have asked his officials to go back to the drawing board to ensure that there was no lacunae in the calculations undertaken by the Rangarajan panel based on which the decision to hike gas prices was taken.