Monday, Nov 24, 2014

No new gas price formula, presentation ‘forged’, says Petroleum Ministry

Written by Amitav Ranjan | New Delhi | Posted: August 18, 2014 9:50 pm

The proposed revision in the price of natural gas has run into a fresh controversy, with the Petroleum Ministry denying having made the presentation before the Prime Minister’s Office (PMO) that recommended a new pricing regime of $6-6.5 per million British thermal units (mBtu) for domestic producers.

“No such presentation was made by MoPNG (Ministry of Petroleum & Natural Gas). This is a concocted and fabricated presentation as far as MoPNG is concerned,” wrote Petroleum Secretary Saurabh Chandra in response to an email from the Planning Commission’s former principal advisor Surya P Sethi.

Sethi had emailed a copy to the PMO and other ministers of the ‘Presentation on Gas Price Issues’, saying it had “inaccuracies and misrepresentations” and any decision based on its “selective, misleading and erroneous claims” would be highly detrimental to public interest.

The ministry now plans to write to the PMO that it was a forged presentation and would be asking Sethi to divulge his source of information since “gas pricing is a sensitive issue and such rumours disturb the policy environment of the country”. Chandra has also sought an inquiry into the “forgery”.

If true, this would be the second instance of forged papers doing the rounds of the Petroleum Ministry. In 2011, the PMO had received letters from three MPs complaining against Sudhir Vasudeva, who was then tipped to take over as ONGC chairman and managing director.

The letters, sent to the ministry, had been found to be fakes.

As per reports, in the “presentation”, the ministry had modified the Rangarajan Committee formula to arrive at a wellhead price of $6-6.5 per mBtu for all domestic producers except Reliance Industries, which would have to sell KG-D6 gas at existing rate of $4.2 till it made up for shortfall in supplies of the past four years.

There were varying reports regarding whom the “presentation” was made to — one version said it was made to Petroleum Minister Dharmendra Pradhan and then sent to the PMO for reference, another claimed that Pradhan made the presentation before the PMO.

The former UPA government had in January this year notified the Rangarajan formula for implementation from April 1 but general elections were declared before a new rate could be announced. The price revision was deferred by three months on the advice of the Election Commission.

On June 25, the new government put this off by another three months pending a comprehensive review as both the Parliamentary Standing Committee on Finance and the Standing Committee on Petroleum had made adverse comments on the formula and sought a relook at production costs before deciding the new rates.

The Rangarajan panel had proposed that all domestic gas be priced at an average of liquid gas (LNG) imports into India and the rate prevalent in the US and UK trading hubs as well as LNG imports into Japan. This would have led to the doubling of domestic gas price to $8.4 in April and to $8.8 for the current quarter.

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