SC moved to stay decision doubling gas prices

NGO Common Cause Friday moved the Supreme Court seeking a stay on the government decision doubling the price of gas produced from Reliance Industries Limited-operated KG D-6 field that would become effective April 1.

It said the decision, doubling the gas price from $4.2 to $8.4 per MMBTU, was "arbitrary, malafide, unreasonable, and based on extraneous considerations" that would give windfall gains to Reliance Industries Ltd.

Seeking the stay of the decision, Common Cause's petition said at least the decision to increase the gas prices should not be made effective for the gas produced from Reliance Industries Limited operated KG D-6 field during the pendency of its petition challenging the government decision to double the prices.

Common Cause had last year moved the apex court seeking the quashing of the decision to increase the gas prices effective from April 2014 and the cancellation of the Production Sharing Contract between the government and the RIL. Its plea along with that of a communist law maker Gurudas Dasgupta is pending hearing.

Common Cause and other eminent people by their 2013 plea have also sought a probe "into the high level collusion between RIL and the political establishment and the corruption involved, including on the aspects of not taking any action against RIL for hoarding the gas...."

The application moved Friday said: "Even if the government were right in assuming that the new price would bring in more investment in exploration, there is absolutely no justification for raising the price of gas from the existing fields. The nation can always pay a higher price for more difficult horizons, provided the duly approved and audited cost of exploration and production warrants the same."

In the present case, the application said that the current production was realised with no prospect of getting a price of $8.4 per million British thermal unit.

The NGO also noted that the Production Sharing Contract (PSC) does not permit a revision in the price of natural gas once the field has been declared "commercial", and this field was declared "commercial" at $4.2 per MMBTU.

The government, the NGO argued, was giving "a windfall to the current contractor, RIL, at the cost of the people. To add to this jeopardy, the government has now allowed RIL to charge the new price for gas that it had already undertaken to produce. Thus RIL would be benefitting from its non-performance and a deliberate drop in production".

The application by Common Cause said that following the doubling of the gas price to $8.4/mmbtu, the well-head price for dry natural gas in India has become the highest in the world.

The application further said that there was no explanation as to why the gas price was fixed in US dollars when the entire production is consumed domestically.

Describing the decision to double the gas price as "arbitrary, mala fide, unreasonable, and based on extraneous considerations", the NGO said that the stay of the same is called for since "valid and serious concerns of the ministries of finance, power and fertilizers have not been taken into account".