OilMin Wants to Con­sult Fi­nance & Law Min­istries on Gas Price Re­vi­sion

LE­GAL TROU­BLE Move fol­lows RIL’s ar­bi­tra­tion move against govt

The Economic Times - - Economy - RA­JEEV JAYASWAL

The petroleum min­istry wants to con­sult the fi­nance and law min­istries be­fore tak­ing a de­ci­sion on re­vis­ing nat­u­ral gas prices, of­fi­cial sources said.

The petroleum min­istry wants to con­sult the law min­istry as Re­liance In­dus­tries has legally chal­lenged the govern­ment by ini­ti­at­ing ar­bi­tra­tion over de­lay in the an­nounce­ment of new gas prices. The pre­vi­ous govern­ment had ap­proved a new for­mula that would have dou­bled gas prices from April 1 but the Elec­tion Com­mis­sion blocked the move.

“It’s a le­gal is­sue. We need to take views of the law min­istry re­gard­ing the im­pact of price an­nounce­ment on the ar­bi­tra­tion pro­ceed­ing,” one of­fi­cial said.

RIL ini­ti­ated ar­bi­tra­tion on May 10 say­ing that planned in­vest­ment of about $4 bil­lion this year could be fi­nalised only af­ter clar­ity on gas prices. The old price was ap­proved for five years that ended on March 31 this year. The new rate was ap­proved twice by the Cab­i­net last year. En­ergy is­sues are high on the list of pri­or­i­ties of the new govern­ment. Petroleum min­is­ter Dhar­men­dra Prad­han is said to have met Prime Min­is­ter Naren­dra Modi on Fri­day to dis­cuss var­i­ous is­sues in the sec­tor but de­tails on the likely dis­cus­sion was not known. Of­fi­cials said an­other rea­son for seek­ing in­ter-min­is­te­rial con­sul­ta­tion is that the pre­vi­ous govern­ment’s Cab­i­net had de­cided that the price of nat­u­ral gas for ev­ery quar­ter should be an­nounced well in ad­vance, leav­ing doubts about im­ple­ment­ing new rates ret­ro­spec­tively from April 1.

“We need fresh Cab­i­net ap­proval for hav­ing missed the dead­line for fix­ing gas price for the April-June quar­ter. Ret­ro­spec­tive pric­ing would also re­quire the govern­ment to cor­re­spond­ingly raise the fer­tiliser sub­sidy for April-June quar­ter,” an­other of­fi­cial said.

Third rea­son is re­lated to the man­ner in which heat value in the new price for­mula is to be cal­cu­lated. RIL has de­manded that new rates should be cal­cu­lated on the ba­sis of gross calorific value (GCV) be­cause all in­puts of the ap­proved Ran­gara­jan for­mula is on GCV ba­sis.

How­ever, all do­mes­tic gas is priced on the ba­sis of net calorific value (NCV), which is about 10% lower. Con­sumers, such as fer­tiliser com­pa­nies want clar­ity on this.

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