Delhi chief minister Arvind Kejriwal on Tuesday directed the anti-corruption branch (ACB) of his government to register an FIR against Reliance Industries Ltd (RIL) chairman Mukesh Ambani, petroleum minister Veerappa Moily, former petroleum minister Murli Deora and former director general of hydrocarbons VK Sibal for increasing the price of natural gas produced in India. The increase will cost the country Rs. 54,000 crore per year.
Kejriwal’s move follows a complaint by former cabinet secretary TSR Subramaniam, former navy chief Admiral RH Tahiliani, former revenue secretary EAS Sarma and Supreme Court lawyer Kamini Jaiswal, which alleged that ministers and bureaucrats, in collusion with RIL, increased gas prices to give the company undue benefits of Rs. 1.2 lakh crore.
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The Cabinet Committee on Economic Affairs had, in June last year, approved a gas pricing formula fixed by a committee headed by former RBI governor C Rangarajan. According to this formula, gas prices in India will rise from $4.2 per unit to $8.4 per unit from April 1 this year.
PSUs like ONGC and OIL produce 70% of India’s gas and so, will get the lion’s share of the benefits accruing from the higher gas prices. RIL’s KG-D6 block accounts for 15% of India’s gas production.
“The Delhi government’s direction to order the registration of an FIR in relation to the union cabinet’s decision to revise the price of gas is indeed shocking,” RIL said in a statement. “We deny these irresponsible allegations and propose to resort to available legal remedies to protect our reputation and preserve the pioneering efforts and investment made by Reliance so far.”
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According to Moily, the higher price is necessary to attract more domestic and foreign investment in India’s oil and gas sector. “If we can import gas at $12-16 per unit, what’s wrong with paying half that price to domestic producers?” he had told HT in a recent interview.
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But experts pointed that gas prices, unlike oil prices, vary widely throughout the world. In the US, it is available at $4.5 to $5 per unit. “RIL’s partner Niko has a 25-year contract with the Bangladesh government to supply gas at $2.34 per unit,” Kejriwal said and questioned the role of the Congress-led UPA government in the decision as well as the BJP’s silence.
The logic: if companies can produce gas at lower prices elsewhere, it can also be done in India.
“In case this price hike is allowed to take place, it will make the life of the common man miserable since it will have a cascading effect on prices of transportation, domestic gas and even electricity,” Kejriwal said.
Reacting to the charge, Moily said: “I think I should sympathise with his ignorance. He should know how the government functions… how these things are done. There should be a system for fixing prices. Nothing is done without expert advice. If he (Kejriwal) can give some money, we will be very happy to reduce the prices.”
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The Supreme Court is hearing two public interest litigations, by CPI MP Gurudas Dasgupta and NGO Common Cause, respectively, challenging the higher gas price and seeking cancellation of RIL’s contract to produce gas in the KG-D6 basin, off the Andhra Pradesh coast.
“I am going to write to the Prime Minister and the petroleum minister to put on hold the price hike till the probe by our ACB is over,” the Delhi chief minister said.
Sibal and Deora couldn’t be reached for their reactions.