The Hindu Business Line : Dabhol: Deora reiterates 60% gas price hike for Gujarat

The issue
The Gujarat Government had been protesting the Union Government's decision of hiking the natural gas prices by around 60 per cent.
It said the move would hurt industries and GSPC as they would have to pay an additional Rs 1,000 crore for buying the gas.

CLOSER LOOK: Mr Murli Deora, Union Minister for Petroleum and Natural Gas, inspecting the pipeline laying activity of Dahej-Panvel-Dabhol pipeline of GAIL at Kankarkari near Surat on Monday. Also seen are Mr Dinsha Patel, Union Minister of State for Petroleum and Natural Gas, and Mr U.D. Choubey, CMD, GAIL.

Ahmedabad May 7 The controversy over the Dabhol issue took a new turn with the Union Petroleum Minister, Mr Murli Deora, air-dashing to Surat and reiterating a 60 per cent increase in the gas price for Gujarat from next month, while also assuring the State his Ministry's readiness for a "discussion" over it.

According to reports reaching here, Mr Deora air-dashed to Surat this morning along with a contingent of ministerial officials and mediapersons from New Delhi and Mumbai for, what he said in a statement, inspecting the gas pipeline laying work in Gujarat on the Dahej-Panvel-Dabhol Pipeline Project being undertaken by GAIL.

"The primary purpose of my visit is to see first hand and to compliment the workers, staff and officers of GAIL who are engaged in executing an extremely challenging and vital national task of 576 km of pipeline construction in 12 months."

However, after this inspection, he told mediapersons that the imported natural gas would cost nearly 60 per cent more to the existing consumers of R-Liquefied Natural Gas (R-LNG) as the Centre has decided to pool the prices. These existing consumers include Gujarat State Petroleum Corporation and many Gujarat-based industries. He said the decision was taken so that "new consumers" (mainly Dabhol Power Company) would get the natural gas at prices lower than those prevailing in the market. This project is set to produce 1,400 MW of cheaper power for Maharashtra, which is reeling under power crisis.

According to the GAIL Chairman, Mr U.D. Choubey, who accompanied the Minister, as per the new formula, the new rates of the imported gas will be applicable from the day the new gas is pumped into the system, presumably from June-end.

He maintained that the existing R-LNG consumers, mainly industries of Gujarat and GSPC, are buying natural gas priced at nearly $3.6 to 3.7 per million BTU. After the pool, they will have to pay around $5.90 per million BTU. The price had gone up as GAIL is importing LNG from the spot market between $8 and 9 per million BTU.

The Gujarat Government had been protesting the Union Government's decision of hiking the natural gas prices by around 60 per cent and said it will hurt the industries and GSPC as they would have to pay an additional Rs 1,000 crore for buying the gas for which they have entered into long-term contract with Petronet LNG Ltd (PLL).

On May 5, the Gujarat Minister of State for Energy and Petroleum, Mr Saurabh Patel, had accused the Centre of following "dual policies", meting out a "step-motherly" treatment to Gujarat and that the "Government of India cannot subsidise Maharashtra at the cost of Gujarat."

GAIL was laying the gas pipeline in Gujarat for 220 km, out of which only 12 km were left when the State Government forced GAIL to stop construction of the pipeline in the State. The work recommenced last week after the Centre intervened.

According to Mr Patel, the Chief Minister, Mr Narendra Modi, had already instructed officials to ensure alternative routes for the pipeline so that farmer's interests were not hurt and that pipeline remained to be laid only in a three km stretch in Gujarat. In Maharashtra, 45 km long pipeline still remained to be laid, out of a total of 356 km length in that state.

Power crisis

The Dabhol issue cropped up recently between the adjoining States of Maharashtra and Gujarat, due to power crisis in the former and steep hike in gas prices for the later.

Maharashtra is holding Gujarat responsible for the delay in completion of the gas pipeline so that the Dhabol project could not begin in June as decided by the company.

On the other hand, Gujarat has been accusing the Centre of not sorting out price issue and that Maharashtra had not only failed to add any power generation capacity over the years but was also "inefficient" in power management.

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