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Renowned environmental activist urges Indian PM to take stringent action against petroleum minister Moily
Renowned environmental activist Dr S Jeevamanda Reddy has urged the Prime Minister Dr. Manmohan Singh to take stringent action against the Minister of Petroleum M Veerappa Moily in national interest. In a letter to the Prime Minister, he cautioned that it will be dangerous to keep such people in the cabinet.

Referring to the letter sent by Veerappa Moily defending the gas pricing- doubling the price from April, 1, 2014, following the AAP leader Arvind Kejriwal's observations and a letter sent to the Prime Minister, he made following observations to counter the minister's submissions.

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According to Dr Reddy, while the contract provides for termination in case of a default by a contractor, the oil ministry under S. Jaipal Reddy in May 2012 had slapped penalty of $1.005 billion on RIL for failing to produce natural gas in line with the pre-stated targets.

Moily in his letter to the Prime Minister states that "In view of the contractual provision under the PSC, the government will not be able to terminate the contract on account of shortfall in production as the matter is pending before the arbitral tribunal".

Dr. Reddy lamented that this clearly indicates it is a fraudulent action by the minister as indicated by Kejriwal. The minister through this letter exposed himself that there is a nexus between him and RIL. Otherwise he would have waited for the tribunal's decision before implementing the price raise to such company. The present minister is not worried on loss to nation & people but only interested to RIL getting profits.

It states that, ?The production sharing contract (PSC) does not have any explicit provision for penalties in case of default. A contract can only be terminated in case of a default?. Is it not under production a default? Then why, the petroleum minister instead of cancelling the contract of RIL ? KG-D6 gas fields for the default helping RIL through doubling the price.

He alleged that the Minister with this letter was trying to defend his actions in doubling the price of the gas from $4.2 to $8.0, by saying that this is also beneficial to public sector firms. He quotes ONGC's cost of production as $3.6 per M.B.T.U. Therefore, without raising natural gas prices from April 1, 2014 several gas fields of both private sector firm RIL and state-owned ONGC would be economically unviable to produce.

He said that here the can be asked that, if all the parties would have been producing the gas at the contractual agreement level, the cost of production would have been far below $3.6 and thus they would have been earning the profits at $4.2 itself. Is it not so?? Minister hasn't looked in to this aspect while the previous minister imposed fine for such action.

Moily's argument that "In choosing the basis for fixing the gas price, it is tempting to think that by choosing a lower price we are assuring consumers the same amount of gas supply at a lower price. The fact is that the price formula affects the investment that will be undertaken in exploration and production and therefore the total volume of gas likely to be produced", clearly reflect his vested interests, acccording to Dr. Reddy.

To raise the prices, international oil cartels followed lower production and this lead Middle East Oil wars. May be Moily not aware of this fact, Dr Reddy added.


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