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Journalism of Courage
Finance minister Pranab Mukherjee had his way on Wednesday with the Cabinet approving a bold move to align administered price of natural gas charged from power and fertiliser producers which was opposed by their ministries to market level. It approved more-than-double price increase,raising it to Rs 7,500 per thousand cubic metres (TCM) from the present Rs 3,200 per TCM.
The new price would be applicable to small consumers and Supreme Court-mandated industrial units in and around Agra and Ferozabad as well as for compressed natural gas (CNG) that is pumped into local transport bus.
Petroleum minister Murli Deoras initial proposal to the Cabinet was to raise consumer gas prices for power and fertiliser held stable since 2005 first to Rs 4,142 per TCM and then to Rs 7,500 per TCM from 2012-13.
But it pulled out that proposal after the finance ministry said that it should not wait for
three years,and suggested that the the administered price could be straightaway aligned with market price.
The finance ministry said that the abrupt change would not have significant impact in cost of power production and for fertilizer
sector,though the price rise will result in
an increase in fertilizer subsidy,the inflow of revenue to the Central government is expected to be more than the subsidy amount,thus
generating additional revenue to the Central government.
The ministries of power and fertiliser consumers of 95 per cent of APM gas had opposed the phased increase as well as the shift to market pricing after three years,saying it would raise electricity tariff by 60 paise per unit and add an additional burden of Rs 4,019 crore per annum on urea subsidy. The revised proposal was not sent to them for their comments,as is the usual practice.
Briefing after the Cabinet meeting,a petroleum ministry official said that on an average,power cost would go up by 2.75 per cent while the increase in fertilizer prices would be borne by the government through subsidy.
He said that since gas cost constituted only about one-third of CNG consumer price,the impact of increase in APM price of gas on CNG prices would be less. Piped natural gas,whose price is linked to that of LPG,would be determined individually by the private companies that supply it in different cities.
The price increase would provide the required money to state-run oil and gas explorers ONGC and Oil India to expand exploration and production facilities to raise gas output from matured fields through increased and
enhanced oil recovery projects,said a government statement.
The move would provide ONGC about
Rs 7,000 crore annually while OILs gain would be around Rs 700-800 crore,the official said.
