Left parties demand discussion before any decision on KG basin gas price

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LEFTNew Delhi, June 24;Left parties on Monday asked the government to put on hold any move to hike the price of natural gas from RIL’s KG basin and hold wider consultations with concerned ministries and the states before taking any decision in the matter.

Asking the government to explain its “hurry” on the matter, Left leaders, including Sitaram Yechury (CPI-M) and Gurudas Dasgupta (CPI), told a press conference that the issue should be discussed in Parliament in the upcoming Monsoon Session as any increase in the gas prices would be effective only from April 2014.

Demanding the setting up of a Group of Ministers on the issue which has led to “differences among major Ministries”, they claimed the move would lead to “windfall profits” to a corporate house and “a rise in the subsidy burden at least by Rs 1.50 lakh crore annually.”

Terming a hike as “completely unjustified”, Mr. Yechury said it would have serious implications on the power and fertiliser sectors which are major consumers of natural gas, would “cripple the economy, especially agriculture sector, and lead to greater agrarian distress and increase the incidence of farmers’ suicides.”

In a joint statement, the CPI, CPI(M) and RSP said, “We demand that any price increase should be kept in abeyance and the government should come out with full facts and figures and have a debate with all stakeholders before it pushes ahead with this move.”

Mr. Dasgupta, who has been lambasting the government over the proposed move for the past few weeks, asked “why is the government in a hurry to pass this proposal? Why is there no GOM (Group of Ministers) on the matter? Why have the states not been consulted on the issue? Why is the calculation (of gas prices) being done in dollar terms?”

With the decline in Rupee, RIL is getting the benefit as it is getting the price close to $ 15 per unit, he claimed, accusing the private oil company of “systematically” reducing production from its KG Basin.

Noting that the government had hiked gas prices from $ 1.8 per unit to $ 4.2 in July 2010 and was now proposing to raise it to $ 8.4, Mr. Yechury said the price in the US was $ 4.32, in Pakistan $ 4.98 and in Bangladesh $ 0.78.

“The ONGC’s APM (Administered Price Mechanism) already covers the expenditure incurred on this gas,” he said, adding that the logic of international price parity was completely unacceptable as it should be based on production costs.

Mr. Dasgupta alleged that “the government is under duress of a particular corporate house to pass this proposal at the earliest. … By increasing the price, the government will take a disastrous step due to the arm-twisting by this corporate house which is deliberately reducing production that now stands at 19 per cent of the desired level.”

The present price of the natural gas is $ 4.2 mmbtu (Million Metric British Thermal Units). The government- appointed Rangarajan Committee has suggested a price of $ 8.4 mmbtu from April 2014.

The Petroleum Ministry, Finance Ministry and Planning Commission are insisting on a price much higher than the Rangarajan formula, which is being opposed by the Ministries of Power and Fertilisers.

“The annual subsidy bill will be more than Rs 1.5 lakh crore if only the Rangarajan Committee recommendation is accepted,” Mr. Yechury said.

Mr. Yechury, Mr. Dasgupta and RSP leader Abani Roy, who was also among the signatory to the joint statement, appealed to all opposition parties to prevent the government from any further hike in the gas prices.

Responding to Petroleum Minister Veerappa Moily’s charge that Mr. Dasgupta was supporting the “import lobby” and “vested interests” by opposing a price hike, the CPI leader said the only importer of gas were two public sector undertakings – GAIL and PLL.

“Our vested interest is to maintain the interests of the country and the people,” retorted Mr. Yechury.

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