‘Gas price to the consumer could be uniform’

There is already a thinking in that direction. Currently,there are so many prices for natural gas within the country,and there is a thinking that why can’t there be uniform pricing? Uniform pricing by way of pooling of prices doubtless has many advantages. But it needs to be examined how far the pooling is feasible. This is the subject matter of a study by GAIL India which is expected to come out with its findings this month.

There are several potential implications for such pooling,and these need to be examined. There is administered pricing on about half of the volume of gas produced. Since APM price is cheap,consumers are happy with it,but the producing companies are adversely affected. Then there is the K-G DG gas that is priced at $4.2 per million British thermal unit (mmbtu). There is also gas from various other sources priced between $3.5 to $5.7 per mmbtu. Imported gas (in the form of LNG which needs to re-gasified on Indian soil) comes at an even higher price of $4.5 per mmbtu. The spot prices of LNG are around $6 per mmbtu. Pooling of prices will have several implications—financial,legal and administrative—for different stakeholders. We have to study all these aspects.

Won’t a fixed price to all consumers amount to thwarting the principle of free market? Isn’t well-regulated free market a better option?

Pooling prices for the consumers is not necessarily a market distortion. Even price fixation is there in many sectors. For example,consumer price of electricity continues to be determined by state regulatory commissions. The price at which state electricity Boards buy from producers is also regulated. At the same time,a part of the power is traded freely in the market.

What helped increase hydrocarbon output in 2009?

The first major output of New Exploration & Licensing Policy (Nelp) was in the form of K-G D6 production and this has the potential of doubling domestic production at its peak,expected in the next few months. Another major breakthrough was in the area of crude oil. Cairn Energy’s production from Rajasthan’s Barmer district has commenced and the expectations are that this would account for 25% of India’s domestic oil production at the peak,expected in about a year.

Are you open to more acquisitions abroad?

Of course. We are open to more such acquisitions. We have to have energy security and one way is to go shopping abroad for assets. We do look out for possible acquisitions all over the globe. It is an ongoing process,but at this stage,nothing more can be said about any deal.

In the Nelp-VIII auction,many blocks received single bids,that too from state owned-ONGC. What can we do to make future auctions more attractive?

Every year we hold pre-bid conferences with the industry and then take a decision on the auction of fields in the light of their views. We will meet the industry again this year for the next Nelp auction.

In the RIL-RNRL dispute and litigation over supply and pricing of K-G D6 gas,the government’s role has been criticised in certain quarters. The allegation is that the petroleum ministry did not intervene in time even as it was clear that the feud between the Ambani brothers could potentially undermine the government’s ability to perform its function as the guardian and owner of natural resources. Later,when the government intervened after the Bombay High court judgement,some quarters saw a bias in favour of one of the brothers. Your comments.

The case is still sub judice. Hence it may not be appropriate to delve into the merits or otherwise of the case as such. However,the charges against the ministry are completely incorrect and unfounded. Ordinarily,the government need not intervene in a private dispute between parties. But the government cannot merely watch when the case adversely impacts national interests. The ministry had intervened even earlier in the case in the Bombay High Court in the wake of injunction on production and sale of gas and got the injunction vacated. Again,the cause of action for filing a special leave petition in the Supreme Court arose after the judgment of the Bombay High Court which,for the first time,gave effect to the family MoU between the two parties which was contrary to the government’s policies on utilization and pricing of gas which flowed from the Production Sharing Contract and the government’s ownership of gas. The government’s intervention has been without favour or fear.