Moily says proposed natural gas price revision to apply to all companies

Strongly refuting allegations of favouring Reliance Industries, Petroleum and Natural Gas Minister M Veerappa Moily has said that the proposed revision in natural gas price will apply to all companies, including state-owned ONGC.

He said the proposed increase in natural gas price is being done strictly in line with the formula proposed by the Prime Minister appointed panel headed by Economic Adviser C Rangarajan.

In a point-by-point rebuttal to allegations made by Communist Party of India (CPI) leader Gurudas Dasgupta, Moily said the former was wrong in saying that the petroleum ministry has deviated from the recommendations of Rangarajan Committee.

Moily said: "The new pricing, if approved by the Cabinet Committee on Economic Affairs (CCEA), will apply to all gas produced in the country. Two-thirds of the gas produced in the country are by PSUs and the new pricing will apply equally to them and they stand to benefit more out of it."ointing out that price revision was a contractual requirement, Moily said it was also required to spur investment in oil and gas exploration, which had stagnated over the past few years.

He added that gas finds in deep sea were not economically viable enough to develop at the current rate of USD4.2 per mmBtu (million metric British thermal unit).Mr. Dasgupta talks of fertilizer subsidy rising due to gas price increase, but what he does not realise is that, if domestic production does not increase, we will have to import gas. Imported LNG cost three times the price of domestic gas," Moily said.

Moily was attending an oil and gas conference in Bangkok when Dasgupta made the allegations at a press conference in New Delhi on Thursday.

Moily said the Rangarajan Committee was appointed by Prime Minister on a request from Moily's predecessor S Jaipal Reddy.

The panel suggested pricing 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 USD 8, but in the note to CCEA, the oil ministry modified it to bring it down to USD 6.775 per mmBtu.

"Spreading false information will scare away investors. We need technology and investment to explore and produce more domestically so as to cut reliance on imports," he said

Moily said 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.

"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," a statement issued by the Ministry said.

Moily also refuted Dasgupta's allegation that oil secretary Vivek Rae was not on the same page on gas price revision.

He said: "There is no question of Secretary opposing (gas price revision). We are only forwarding Rangarajan panel recommendations to the Cabinet," adding that the use of imported gas would result in two to three times higher subsidy outgo for fertiliser and power.