Rejecting the Communist Party of India’s allegations of favouring Reliance Industries ltd (RIl) as “malicious”, Petroleum Minister Veerappa Moily on Friday said that the proposed increase in the price of natural gas will apply to all companies, public and private. He claimed that the Petroleum Ministry was pushing for a slight raise in the gas price which is lesser than the figure suggested by the C Rangarajan Panel. The Ministry moved a Cabinet note in this regard earlier this week.
“The proposed pricing guidelines shall be equally applicable to both the private and public sector companies. It may also be highlighted that more than 60 per cent 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,” the statement issued by the Ministry said.
Moily said that the C Rangarajan Panel had recommended pricing of all domestically produced conventional and non-conventional gas at a mix of international hub prices and actual cost of liquefied natural gas (lNG). The price as per this formula came to $8 per MMBTU, but in the Cabinet note to the CCEA moved by the Petroleum Ministry earlier this week, it was modified to $6.775
per MMBTU.
Moreover the Minister explained that the Rangarajan Panel formula has to be approved by the CCEA and views of the other ministries and Planning Commission shall be placed before the Cabinet for consideration. If approved, the proposed pricing formula would become effective from April 1, 2014.
Moily, who was in Thailand on Thursday when the allegations were levelled by CPI National Secretary Gurudas Dasgupta, rushed back to Delhi on Friday afternoon, and the Ministry’s media department was asked to put together the statement explaining the entire modus operandi behind setting up the panel and refuting the charges.
Highlighting the widening gap in demand and supply of gas owing to dwindling gas production in the country, Moily said that “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 (more than 7.00 lakh crores)”.
“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,” the statement said.