Moily attacks Dasgupta for malicious campaign on gas price

In his sharpest attack on critics of the gas price hike decision, Oil Minister M Veerappa Moily on Thursday accused CPI leader Gurudas Dasgupta and his accomplices in the petroleum ministry of carrying out a malicious campaign for vested interests.

PTI| Updated: May 01, 2014, 20:19 PM IST

New Delhi: In his sharpest attack on critics of the gas price hike decision, Oil Minister M Veerappa Moily on Thursday accused CPI leader Gurudas Dasgupta and his accomplices in the petroleum ministry of carrying out a malicious campaign for vested interests.

Moily, who for the past year faced the embarrassing situation of his official notes finding their way into the hands of Dasgupta and other opponents of the hike in gas prices within hours of signing them, released an angry statement alleging a nexus between some within his ministry and those outside working to stall the move.

Denying any mala fide in his decision making, Moily refused to name the so-called accomplices even though it was widely believed he was hinting at officials in the ministry's exploration division.

"Dasgupta has been making false, baseless and misleading allegations against me frequently in the past and all those have been convincingly rebutted by me," he said in a signed statement.

"The present allegation (of attempts to circumvent an Election Commission ban on raising gas prices) is also one in the series of such malicious campaign for the reasons best known to Gurudas Dasgupta and his accomplices, both inside and outside the ministry," Moily said.

Moily said he asked his ministry to notify the revised price for April-June based on the formula approved by the Cabinet and notified on January 10, soon after the general elections ends and the model code of conduct is lifted.

"Therefore, the allegation that this order on the file note sheet is in contravention to the Election Commission directive to favour any individual operator is completely baseless, malicious and misleading and is denied in toto," he said.

The statement came a day after Dasgupta wrote to Prime Minister Manmohan Singh and Chief Election Commissioner V S Sampath for "openly defying" the poll watchdog's directive to hold back the gas price revision until completion of the Lok Sabha elections.

The first revision in gas prices in five years is aimed at propelling domestic exploration and production, which was not viable at the current rate of USD 4.2 per million British thermal units, Moily said.

"One can reasonably say that there appears to be some collaboration by these people (opposed to gas price revision) with the vested interests and import lobbies who do not want the domestic oil and gas sector to grow so that the country remains dependent on imports for more than 80 percent of its oil and gas requirements," the minister said.

The oil and gas sector, he said, had started looking up during the past 15 months due to more than 45 important policy decisions that would ultimately pave the way for 50 percent reduction in import dependence by 2020.

"The country cannot afford to continue with a USD 160 billion import bill on oil and gas," he said.

On the allegation that the gas price revision, which would almost double the rate to USD 8.3 per million British thermal units, was aimed at benefiting Reliance Industries, he said the Mukesh Ambani-run firm won and signed the contract for the now controversial KG-DWN-98/3 or KG-D6 block in 2000, during the rule of the BJP-led NDA government.

The UPA government and his ministry have been working within the framework of the production sharing contract (PSC) signed in 2000. The PSC provides for arm-length pricing of oil and gas and the last rate derived through such methodology was valid till March 31, 2014.

For a price or formulation for the period from April 1, 2014, the Prime Minister's Office (PMO) constituted a high-power expert committee under C Rangarajan in May 2012 when S Jaipal Reddy was the oil minister, he said, adding that the panel submitted its report in December 2012 and the Cabinet approved the formula it had suggested in June 2013.

For the KG-D6 block, the Cabinet asked RIL to submit a bank guarantee equivalent to the increase in the rate, which the government would encash if it was proved that the company deliberately suppressed output in anticipation of a gas price hike, he said.

As per the revised pricing guidelines (approved by the Cabinet on December 19, 2013), the government has to notify the price of gas on a quarterly basis using data for the previous four quarters with a lag of one quarter.

"When the ministry was in the process of notifying the gas price for the quarter April-June 2014, the General Elections were announced and model code of conduct came into force on March 5," Moily said.

The oil ministry sought permission from the Election Commission, which ordered that the proposal to notify the gas price be deferred while the model code of conduct is in force.

"It is obvious that once the model code of conduct is lifted, this order of deferment by the Election Commission will cease to exist and the CCEA decision will naturally come into force," he said.

Moily said he had ordered that after the model code of conduct is lifted, the gas price be announced for the April-June and July-September quarters, as per guidelines approved by the Cabinet Committee on Economic Affairs (CCEA).

He said all his decisions in the ministry were in "national interest" and such a "malicious campaign by the vested interests has not been able to deter my resolve to work towards nation building."

The minister said the new gas price will apply to both public sector and private sector producers. State-owned firms including ONGC account for 65 percent of the gas produced in the country and will be the biggest beneficiary, while RIL produces about 15 percent of the output.

"At the (current) price of USD 4.2 many projects have been found commercially unviable and declaration of commerciality in some fields in KG Basin and Cauvery basin are help up due to non-viability (of the gas discoveries) at this price," he said.