Centre informs SC about new domestic natural gas pricing guidelines

The central government Friday informed the Supreme Court that it has notified new domestic natural gas pricing guidelines under which the gas price stands hiked from $4.2 mmbtu to $5.61 mmbtu.

The central government also sought the dismissal of pleas by CPI leader Gurudas Dasgupta and NGO Common Cause.

They had moved the court challenging the erstwhile UPA government's decision to double the gas prices from $4.2 mmbtu to $8.4 mmbtu alleging that it was to give windfall gain to Reliance Industries which was engaged in gas exploration and production in KG basin.

Solicitor General Ranjit Kumar told an apex court bench of justices T.S. Thakur, J. Chelameswar and Kurian Joseph that the new guidelines were issued Oct 25, 2014 and were effective from Nov 1. This supersedes Jan 10, 2014, notification issued by the previous government on increasing the gas prices from Apr 1, 2014.

As the solicitor general informed the court about the new gas price of $5.61 mmbtu, senior counsel Harish Salve said the notification says that RIL would continue to get the prevailing price of $4.2 mmbtu as the enhanced portion would be kept separately and would be subject to the outcome of the arbitration.

Salve said guidelines says that "the matter relating to cost recovery on account of shortfall in envisaged production from D1, D3 discoveries of Block KG-DWN -98/3 is under arbitration".

"The difference between the price, determined under these guidelines converted to NCV Aand the present price ($ 4.2 per million BTU) would be credited to the gas pool account maintained by GAIL and whether the amount so collected is payable or not to the contractors of this blocks would be dependent on the outcome of the award of pending arbitration and any attendant legal proceedings," Salve said.

"If I fail in the arbitration the entire money will go to the government and of I succeed then I will get the price determined by the arbitration", Salve told the court.

Having said this, Salve urged the court: "Please hear (the matter) after the arbitration. There will be our evidence. Their (government) evidence and the expert opinion" before the court.

"If you agree that it (hearing) should go beyond the arbitration award," the court said suggesting that it could adjourn the hearing till then.

"I am suggesting that," Salve told the court.

However, the government's plea seeking the dismissal of PILs by Dasgupta and NGO Common Cause and one by Maohar Lal Sharma was opposed by them.

Both senior counsel Colin Gonsalves, who appeared for Dasgupta, and Prashant Bhushan, who appeared for NGO Common Cause, said they were not just opposing the hike in the natural gas prices but seeking the relinquishment gas fields not developed as provided under the PSC.

Bhushan urged the court to ask the central government to respond to the second CAG report that vindicates all that they had been alleging till date. He said that it was a thick report.

However, Ranjit Kumar countered it saying that it was just a draft report which has not been submitted to the government.

Taking a jibe over Bhushan describing it as a thick report, Salve said I thought it was "thick in content and not thick in size".

The court set Jan 16, 2015 as the next date of hearing in the case.