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Monday, 24 March 2014 00:00
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EC stand on gas pricing unfortunate

Chief Election Commissioner VS Sampath is technically correct when he says that a decision which has been awaited for so long can be put on hold for another two months. Except, the decision that the CEC is talking of—allowing higher prices for natural gas in the country by producers like ONGC, OIL and RIL—has not been awaited, it has been notified, albeit after a very long wait.

It was in 2012 that a decision was taken to examine the issue of raising prices for natural gas, to put them in line with those prevailing internationally. This was done for a variety of reasons. One, the production sharing agreements said that this would be done for both gas and oil—while firms get international prices for their oil, they don’t for gas. Two, firms including ONGC were arguing that it was unviable to explore/produce gas in India’s deep waters—where the bulk of the gas is—at the current $4.2 per mmBtu; indeed, firms like RIL were speaking of the need for prices of $10 and more. The Rangarajan committee was then set up in 2012 and, by December 2012, it submitted its report. This then got discussed between various ministries and it was only in the middle of 2013 that the Cabinet cleared it. Inexplicably, it took till the end of 2013 for this to be notified—but this was finally done in January 2014.

So when the EC examines the matter, it needs to keep this in mind—after all, the EC is not a court where Kejriwal can get a stay on a decision; its limited remit is only to ensure no new decision gets taken by a government that it on its way out. And there are two major reasons why the decision cannot be postponed till the next government is in a position—this could be a few months—to take a call on the issue. One, all gas contracts come to an end on March 31, so a new price needs to be put in place. Two, since all oil firms have a window of just October to February to drill for oil in the KG Basin, they need to be mobilising oil rigs and other supplies—normally in short supply in global markets—as early as possible; but if prices are not raised, this process will get delayed, and the country will lose precious time.


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