The Hindu Business Line : GoM meet on gas price hike for fertiliser, power units inconclusive

A MEETING of the Group of Ministers (GoM) held here on Tuesday to discuss a proposal to hike the price of natural gas for fertiliser and power units and also to set up a regulator for the oil sector remained inconclusive.

"The discussion was inconclusive. Time did not permit the Ministry of Petroleum & Natural Gas to make the two presentations we had prepared. The discussions will continue," the Petroleum Minister, Mr Mani Shankar Aiyar, told reporters after an hour-long meeting of the panel of Ministers headed by the Defence Minister, Mr Pranab Mukherjee.

The Petroleum Ministry is pushing for differential pricing of natural gas for different sections of consumers. It had proposed hiking the price of natural gas from Rs 2,850 per thousand cubic meters (TCM) to Rs 3,200 per TCM for fertiliser units and Rs 3,600 per TCM for power sector on a provisional basis.

The GoM, comprising Ministers of defence, finance, power, petroleum and fertiliser and Deputy Chairman, Planning Commission, was also expected to consider raising transportation tariff on the trunk HBJ pipeline by Rs 10 per TCM.

The Oil Ministry has further proposed that the Gas Price Linkage Committee for making gas allocations be scrapped and all new gas for new/capacity expansions in the two sectors be valued at market price.

It has further suggested regulation of gas supplies by Oil and Natural Gas Corporation and Oil India Ltd be transferred from the Petroleum Ministry to the regulator once it is formed, until full deregulation of gas prices is achieved.

All the gas produced by private firms was to be sold at market price, which is almost double that of the current price.

The GoM was also to consider setting up of the Petroleum and Natural Gas Regulatory Board to oversee downstream oil refining and marketing of petroleum products, natural gas sale, transportation and product and gas pipelines.

"The GoM will meet again, ahead of the Budget session to discuss the issues. But, before that the Secretaries of various administrative ministries will meet and discuss the matter," Mr Aiyar said.

"The idea is not to try and delay things but to fix them before the Budget session," he said.

The Ministry of Petroleum has opposed a suggestion from the Planning Commission for setting up an overall regulator for the entire energy sector on the grounds that two key sectors of coal and power were on the concurrent list where both Central and State Governments have a decisive say in policy matters. Besides, the Supreme Court has ruled that natural gas will remain under the exclusive jurisdiction of the Central Government. Given such a structure, it was not practical to have a single regulator for the energy sector, it had opined.

The Ministry had also turned down suggestions for bringing upstream oil and gas exploration and production under the ambit of the proposed Board. It has held that the Directorate-General of Hydrocarbons is the regulator for the upstream sector and this was in concurrence with international best practices.

The proposal also includes the creation of an Appellate Tribunal to hear appeals against the decisions of the proposed oil sector regulator. A Petroleum and Natural Gas Technical Advisory Authority would also be constituted under the proposed regulator, the Petroleum and Natural Gas Regulatory Board, to advise the Government and the regulator on technical matters.

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