Will PILs And Litigations Hamper Gas Price Hike?

The government has finally notified the new gas pricing formula setting the stage for an increase in gas prices from the current level of USD 4.2/mmbtu to USD 8/mmbtu, almost doubling them. Quizzed about the expected price of gas on April 1 at the Petrotech Conference held at Greater Noida, Petroleum and Natural Gas minister M Veerappa Moily said; “It is very difficult to predict the exact price of the gas after 3 months but it can be anywhere between USD 7-8/mmbtu.”  He also requested the media to portray a right picture for the increased gas pricing. “We have to understand that if somebody is investing then it is not that he is getting away with a windfall. In fact, it is always in the domain of the government to welcome investment and wealth in any sector and has always remained to be so and it can push whatever program it wants to put forward,” he added.

But whatever Moily’s assertion be, the way political uncertainty has engulfed the country and the way investigations, reviews, audit scrutinies and litigations have been done in earlier instances like the 2G license case, coal block allocation, highway projects, environmental clearances etc., in all probability this “well planned and well orchestrated” decision of doubling of gas prices will have to face a legal scrutiny too. “As far as I know already a PIL has been filed against the decision and now the court has to decide about that. Also till April, in all probability more cases can be filed for this decision but how it will affect this decision, will be interesting to see, as this was done on the basis of an expert committee recommendation and then vetted by the cabinet and government notifications,” commented B C Tripathi, CMD GAIL on the whole development.

Other petroleum experts also feel something similar. Stung by the bad publicity and the mess of legal battles on various decisions, the government seems to be remaining extra conscious this time and has followed all the procedures required in taking this big and “controversial” decision. Controversial in the sense that its own power and fertilizer ministries have been up against the raising of gas prices citing that it is slated to be a windfall for RIL.

Aam Admi Party leader and senior advocate Prashant Bhuhan has already been lamenting that the Congress and the BJP are puppets of RIL and hinted towards a big scam about the increased gas prices. A senior official of ONGC informed DSIJ that the government has taken every step to make this decision looked foolproof and there is little chance that it will falter in the court of law.

“If you see, the cabinet decision had come in the month of June. The Finance ministry thereafter had raised the matter of RIL hoarding gas. Also the Power and Fertilizer ministries’ had been heard on the matter. The matter was then again sent back to the CCEA for review and recommendations of another committee before ultimately clearing and notifying it with a rider for filing of a bank guarantee by RIL,” the official explained. “This whole process has made this decision a perfectly democratic, legal and taken within a foolproof system,” he added.

On the other hand there is also a feeling that this has made India an attractive investment destination and will bring more investors to the country. “It is putting India onto the international map in the oil and gas exploration sector and this practice is in sync with global practices so it would be beneficial for the sector, quoted A K Balyan,” MD Petronet LNG.

Considering all this, it will be very difficult to find any loophole in this decision. But the way prices are expected to double, has certainly raised many eyebrows. Another very important factor in this decision is that, the real effect of this price rise would straight away come in the election month itself and almost all political parties would want to grab that chance. “Soon after the increase of gas prices the net effect on the prices of Transportation CNG and PNG (Pipe natural gas used for cooking) would see an increase of 35% from April 1,” informed B C Tripathi. This can prove detrimental for the Congress which is already facing a grim situation on the election front.