The Hindu : Front Page : State stung by Petroleum Ministry’s stand

Online edition of India's National Newspaper
Wednesday, Jul 04, 2007
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State stung by Petroleum Ministry’s stand

HYDERABAD: Stung by the stand taken by the Ministry of Petroleum that the Centre had no role in fixing gas prices, the State Government is preparing for a possible “showdown” with it for protecting the interests of the State.

Officials of the Chief Minister’s Office (CMO) and the Industries Department are terming the Ministry’s observations on pricing of gas in the Krishna Godavari basin as “mischievous” and that “there is something wrong”. They are questioning how the Centre can give up its responsibility when the State is not ready to accept the “arbitrary” price quoted by Reliance Industries Limited (RIL).

The Government is not ready to buy the argument of RIL on “market discovery price” since it comes into play when there is competition among sellers whereas the sale of gas from the KG basin is RIL’s monopoly. “Any effort to determine market discovery price in this case goes against the basics of a market economy,” a CMO official told The Hindu.

The price quoted by RIL was obtained selectively from private power producers who passed on the bill to consumers. “This is the worst situation and no court will accept the company’s claims,” the official said. As the Government is yet to receive any communication on the Ministry’s stand, it has decided to wait before embarking upon a definitive course of action.

Greater role

Industries Department officials argue that the Centre will, in fact, have a greater role in pricing as the gas find in KG basin is a “national asset”. The price for evacuating it will have to be “negotiated” and not discovered. “The company is not the owner of the asset. It has been given the handle to an extent where it can recover its investments along with interest,” an official said.

He said that a ‘showdown’ with the Union Ministry had already begun as Chief Minister Y.S. Rajasekhara Reddy had stopped addressing it and was seeking direct intervention of the Prime Minister to resolve the impasse.

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