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Why Delhi govt. took decision to order a probe against Reliance in gas price case?
Satbir Singh Bedi | 12 Feb 2014

The decision to order a probe was taken by the Delhi government after the perusal of a common complaint filed by eminent citizens - former Cabinet Secretary TSR Subramaniam, former Navy chief Admiral RH Tahiliani, former secretary to government of India EAS Sarma and noted Supreme Court lawyer Kamini Jaiswal.


 
The complaint stated that gas prices in the country will be doubled from April 1 this year due to the alleged active collusion between the RIL and some ministers of the central government. In case this price hike is allowed to take place, it will make the life of common man miserable since it will have a cascading effect on transport, domestic gas and even electricity prices.
 
The impact of this hike in gas price would cost the country a minimum of Rs 54,500 crore every year, and in addition to this the central government allowed the RIL to make a future windfall profit of Rs 1.2 lakh crore.
 
 
 
This will have an adverse effect on the household of a common man who uses piped and compressed natural gas (CNG). Farmers will suffer since prices of fertilisers will go up and so would the prices of electricity being generated from gas-based power plants. 
 
 
 
Since the decision to double the prices of gas will become effective from April 1 this year, when the term of the UPA government would almost be over, it should have left the decision on gas prices to the next government and this hurry shows a malafide intention of helping this particular corporate house, the RIL.
 
The government decision to hike the gas price from existing $4.2 (Rs 262.25)  per mmbtu (One million British Thermal Unit) to $ 8.4 (Rs 524.20) per mmbtu will make the gas prices in India one of the highest in the world.
 
 
 
The gas prices have been hiked with the sole intention of benefitting the RIL and no attempt was made to determine the cost of production independently and accurately.
 
To add to this fraud, there is no explanation as to why when the entire domestic production is consumed internally, then why are the prices fixed in US dollars ?
 
The government took no action against the RIL for its deliberate drop in production and ignored the CAG report and the then Solicitor General’s opinion (in May 2012) and on the contrary accepted the RIL demand for doubling the gas prices from April 1 this year. This is a clear case of causing unimaginable loss to the government exchequer and selling gas at exorbitant price to the common man.
 
 
 
The fluctuation in dollar rate will only lead to a further increase in the gas prices.
 
Documents also reveal that the central government ignored letters by several MPs, including CPI(M) Rajya Sabha MP Tapan Sen, who had highlighted that the RIL demand for $ 8.8 billion to be spent on infrastructure at KG-D6 should be rejected was ignored and the RIL was allowed a future windfall revenue of Rs 1.2 lakh crore ($ 20 billion).
 
 
 
Even if the central government’s argument that new prices would bring in more investment in exploration, what is the justification of raising gas prices from existing fields ?
 
The central government (particularly petroleum ministry) has connived with the RIL to help it in making a windfall profit at the cost of common man and taxpayers by having allowed it to charge a new price for gas that it had already undertaken to produce. 
 
 
 
The cost of production of gas is much less than $ 2.34 per mmbtu. The fact that this company (RIL) had signed long term agreements with NTPC and RNRL for supplying gas at that rate for 17 years clearly shows it was making profits at that price also. RIL’s partner NIKO has a 25 year contract with the Bangladesh government to supply gas at the rate of $ 2.34/mmbtu.
 
 
 
A letter by the RIL to Director General Hydrocarbons (DGH) giving its cost calculations shows the cost of production is less than $ 1 per mmbtu. Then why did it seek a hike in gas prices and why did the central government agree to it ?