Clarify stand on gas pricing: Supreme Court to government

The court asked the Centre to clarify if it will continue with the UPA govt’s policy on gas pricing or it has framed its own policy following the secretaries’ panel report.

The Supreme Court on Thursday asked the Centre to clarify whether it will continue with the previous UPA government policy on gas pricing mechanism or it has its own policy in view of a four-member committee of secretaries having submitted its report recently on the issue.

A Bench headed by Justice TS Thakur asked solicitor general Ranjit Kumar to clarify whether the government is going to change the C Rangarajan pricing formula notified in January that doubled the gas price to $8.4 per million British thermal unit or come with its own pricing formula.

Kumar told the court that it will file an affidavit after the government will take a decision on the gas pricing, which is likely to be announced by September 30. The court posted the matter for further hearing on November 14.

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The Narendra Modi-led government had last month constituted a committee comprising secretaries of power, fertiliser and expenditure with additional secretary in the oil ministry as its member secretary to review the pricing formula keeping in mind public interest and recommendations of the Parliamentary Standing Committee, which said gas price should have some linkage with the cost of production.

However, the new recommendations that have been kept under wraps for the time being are to be reviewed by the oil ministry before taking any decision.

The Rangarajan formula, approved by the UPA government, was to be implemented from April 1 but was deferred by three months as general election was announced. Even the Election Commission has asked the previous government to postpone its implementation. The NDA government on June 25 delayed its implementation by three more months pending a comprehensive review.

When the counsel for petitioners wanted the Bench to stop the government from effecting any price revision for already developed oil fields, the Bench observed that let the government function for a while first. “Its a parliamentary democracy. The government is accountable on the floor of the House. You can raise it there. Why have you taken upon yourself to deal with the issue,” Justice Thakur said, while asking RIL to file its reply on the stay application filed by Common Cause, an NGO.

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Counsel Prashant Bhushan told the court that an increase in gas price would lead to an increase in cost of urea, power and domestic gas. “Every dollar increase in gas price translates to around Rs 1,400 per tonne rise in fertiliser production cost. Rs 20,000 crore will go from government coffers towards providing subsidy to the fertiliser units,” he said asking the court to direct the government to keep the oil price hike in abeyance till the final disposal of the case. However, RIL senior counsel Harish Salve denied having any impact of price revision on the general public.

The apex court is hearing three petitions raising various issues including a directions to restrain the Centre from increasing the gas price from $4.2 to $8.4 per mmbtu at least for the gas taken from the existing fields like KG D-6 basin.

Senior CPI MP Gurudas Dasgupta and Common Cause have alleged “the fact that this decision (price hike) was taken in advance by the government (UPA) shows that it wanted to favour Reliance Industries (RIL) for extraneous considerations.”

fe Bureau | The Financial Express