Moily says no going back on gas price hike decision
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Moily says no going back on gas price hike decision

Last Updated: Saturday, February 15, 2014, 09:12
 
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Moily says no going back on gas price hike decision
New Delhi: Coming down heavily against Delhi Chief Minister Arvind Kejriwal for ordering an "unconstitutional" FIR against him and others for raising gas prices, Oil Minister M Veerappa Moily today said the government will not go back on its decision to hike rates from April 1.

"Where is the question of stalling or stopping anything. It (the decision to raise gas prices for both public sector and private producers) has gone through a governance process ... It was considered by Cabinet twice and approved twice," Moily told reporters on the sidelines of an event here.

The new rates, which are likely to be at USD 8-8.4 against the current price of USD 4.2 per million British thermal unit, are based on the recommendations of a committee that was appointed by Prime Minister Manmohan Singh at the request of Moily's predecessor, S Jaipal Reddy.

Earlier this week, Kejriwal had ordered filing of a police complaint against Moily, Reliance Industries and its Chairman Mukesh Ambani for creating an artificial shortage of gas in the country and raising prices.

"I don't think Delhi government is our appellate authority. What they are doing is totally unconstitutional. And it is definitely against the principles of federalism," he said.

He said the FIR was "a very clear case that they are exercising powers which are extra-constitutional and rather I would say it is contrary to constitutional provisions."

Moily said the decision to allow PSU firms like ONGC as well as RIL a rate equivalent to the average price prevailing at international gas hubs and cost of importing the fuel into India in past 12 months, are based on the recommendation of a panel headed by Economic Advisory Council to the Prime Minister (PMEAC) Chairman C Rangarajan.

"It is absolutely based on recommendations made by the Dr Rangarajan Committee. He is an eminent economist and he has gone through the mills. And I have not changed even a word or a full stop or a comma from the recommendation. So where is the question of Moily's verdict (on raising gas prices).

"The Rangarajan Committee was appointed by Mr Jaipal Reddy who was the (Oil) Minister. I have not appointed the committee to suit my needs," Moily added.
Asked if he would move a higher court to seek quashing of the FIR, Moily said it was for the Cabinet and the Prime Minister to take a call on that because the decision to hike gas prices was not his individual decision.

"Twice (first in June 2013 and then December) it has been cleared by the Cabinet," he said.

Earlier, speaking at the conference organised by India chapter of UN's Global Compact Network, the Minister said energy security for the country cannot be achieved unless competitive prices are given.

"At USD 4.2 (gas price), many discoveries of ONGC have been declared financially unviable by the Directorate General of Hydrocarbons (DGH)," he said adding higher prices will help produce from the discoveries and curb imports that cost between USD 14 to 18 per mmBtu.

Kejriwal had earlier this week stated that he had received complaints that RIL, Ambani and some ministers had manipulated gas prices.

While Kejriwal alleged that the decision to hike gas price will yield Rs 54,000 crore of profits to RIL every year, Moily's ministry has calculated that RIL and partners BP Plc of UK and Niko Resources of Canada will get USD 0.51 billion (about Rs 3,200 crore) additional revenue from a USD 4.2 per unit increase in price for the 14 million cubic meters per day of output from the eastern offshore KG-D6 fields.

The biggest beneficiary of the gas price hike would be the public sector firms like Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) who produce 80 per cent of the country's output.

ONGC, the nation's largest producer of gas at 64 mmcmd, will get USD 1.64 billion in incremental revenue, while OIL will get USD 0.19 billion on 7.5 mmcmd of production.

The government itself stands to gain about USD 2.08 billion (Rs 12,900 crore) from additional profit petroleum, royalty and taxes accruing from doubling of gas rates, it estimates.



PTI

First Published: Friday, February 14, 2014, 13:16


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