Left leaders call for rational policy on gas pricing

New Delhi, Aug 26 (UNI) In an increasingly acrimonious debate, the row over pricing of gas have become shriller with several MPs belonging to the CPI and CPM writing letters to the Prime Minister and Pranab Mukherjee calling for a rational policy on gas pricing.

The spate of letters from the MPs from both the left parties, Suravaram Sudhakar Reddy and Ajay Charaborty of CPI and Abani Roy of Revolutionary Socialist Party (RSP), , has called for a rational policy on gas pricing. This issue was raised in the Parliament last week by several political parties including Yaswant Sinha of BJP, Amar Singh of Samajwadi Party and Tapan Sen from CPI (M).

The Empowered Group of Ministers (EGoM) headed by the Minister for External Affairs, Pranab Mukherjee to look into the issue of pricing and utilisation of natural gas produced from the Krishna Godavari (RG) Basin fields is likely to meet tomorrow.

The MPs were unanimous in their concern on several aspects of gas pricing, varying from the approval process of capital expenditure, which was twice revised from 2.5 billion dollars to 8.8 billion dollars and has been questions by reports submitted by the Committee of Secretaries (COS) and the Economic Advisory Committee (EAC).

The MPs also highlighted the recent issues raised by the Petroleum and Natural Gas Regulatory Board (PNGRB which has called for need of 'multiple players' in the gas transportation and marketing business to 'break monopolies and foster competition.' CPI (M) leader Abani Roy, lamented the hurry shown by DGH to approve the revision of capital cost for the private contractor in just 53 days, when it took 163 days to approve the first proposal.

''The private contractor in collusion with Ministry of Petroleum and Natural Gas (MoPNG) and Directorate General of Hydrocarbons (DGH) are looting the common man and also the government by demanding an increase in capital cost and sale price of natural gas,'' Mr Roy said in his letter.

He also questioned as to why the MoPNG was in hurry to fix the sale price of gas since the production of KG Basin is expected to start only in August 2008. He also wondered if there is any guarantee that the contractor engaged in the activity would not seek further increase in price due to market conditions by the time production commences.

Drawing the attention of the Prime Minister, CPI leader from Andra Pradesh, Suravaram Sudhakar Reddy said ''as per the regulator in the absence of multiple sourcing, the different activity along the whole chain, right from gas pricing to marketing, may be controlled by producers only, either by them or through their affiliates.'' This may pave way for MOUs between producers and gas marketing companies, which may in turn lead monopolistic industrial structure, Mr Reddy added.

He sought the intervention of the PM to ensure the issue raised by the regulator should be taken into account before finalising the gas pricing issue.

Senior CPI MP from West Bengal Ajay Chakraborty has said in his letter that ''the regulators concern should be taken with complete seriousness for it also says that any absence of multiple sourcing options for shippers and marketers of gas is likely to thwart competition.'' Stating that the undermining the observations of the regulator would give wrong signals to this critical sector, Mr Chakraborty said that the creation of monopoly in gas production and distribution due to absence of a transparent policy will hamper fair use of these resources.

Mr Chakraborty also alleged that ''all these activities smell of corruption in the corridors of power in DGH and MoPNG and requested the EGoM to consult all the ministries concerned in a phased manner before arriving at any decision.'' Earlier former Petroleum Minister and senior BJP leader Ram Naik had said reneging on commitments given to investors will discourage companies engaged in finding oil and gas reserves, On the other hand Rajya Sabha MP and a member of the Standing Committee on Petroleum and Natural Gas Tapan Sen, had called on the government to ensure that Reliance Industries Ltd follow the price-discovery pattern arrived through International Competitive Bidding (ICB) by NTPC in 2004.

Maintaining his dogged opposition to the new price quoted by RIL, which he termed ''inflated'', Mr Sen had said even the revised capital expenditure in its New Field Development (NFDP) for D6-KG Basin is questionable.

Mukesh Ambani-led RIL, which has raised the price of gas from KG-D6 Basin, and Anil Ambani Group firm RNRL has already moved the Bombay High Court.

Mr Sen had said that the price quoted by RIL in NTPC's ICB process of 2.34 dollar per million btu as a benchmark price for gas, arrived through the ICB process.

The bone of contention in the issue is that RIL, drawing from its right under the contract for the KG-D6 block, has proposed to price the gas between 4.33 dollar per million British thermal unit (mBtu) and 4.58 dollar per mBtu.

The rate is opposed by Fertiliser and Power Ministries and also by the chairman of Reliance Energy Limited, Anil Ambani, who has sought standardised norms and a proper policy on the issue.

UNI