Parasaran advises Moily not to challenge EC gas price decision

Days after the Election Commission asked the government to delay the doubling of natural gas prices until the completion of elections, Oil Minister M Veerappa Moily today met Solicitor General Mohan Parasaran who advised him against challenging the decision.
Parasaran told Moily the government should not contest the EC's advise in the Supreme Court as it cannot be seen as confronting a Constitutional authority, sources privy to the meeting said.
Sources said Moily explained how the decision to revise the gas price according to a new formula from April 1 was first taken in June 2013 and then ratified in December. It was notified on January 10 and only the new rate, as per the approved formula, remained to be notified.

Following the advice of the SG, the oil ministry will leave implementation of the formula to the new government.
Deferring the new price regime by a few months will not have a material bearing on 85 per cent of the gas produced in the country. Firms such as ONGC will continue to sell gas at USD 4.2 per million British thermal units (mmBtu).
However, the government will have to decide on the gas produced from Reliance Industries' eastern offshore KG-D6 fields. The firm's sales contracts expire at the end of the month and it was looking at renewing supplies to customers, including fertiliser plants, at the new rates.

Sources said the ministry has called a meeting of stakeholders tomorrow to decide on the issue. A directive could be issued to RIL to sell gas on existing terms to government-identified customers until further orders.

RIL is allowed to sell gas from KG-D6 only to customers identified by the government. It supplies 12-13 million standard cubic meters of gas a day under contracts that expire on March 31.
Sources said Moily was of the view that the government had taken the decision to revise gas prices last year, based on the Rangarajan Committee recommendations, after following due process and diligence.

The formula would nearly double gas prices to USD 8 per million British thermal units when implemented.