Richa Mishra

This Oscar Wilde quote describes me the best: Every woman is a rebel, and usually in wild revolt against herself. My friends and colleagues say am soaked in 'oil'. But, I am still learning to count in barrels and smell the gas. This with just the right blend of music and sport.

Richa Mishra

All that jazz about gas!

| Updated on March 09, 2018

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I had read somewhere that natural gas pricing is noisy. Then I was amused. Today, I understand a little why it is, as every cent change impacts our electricity and piped gas (used for cooking) bills.

There are just three reasons for it: Politics (importers lobby), Politics (political parties), and Politics (domestic producers)!!!

Thus, one does understand the dilemma which the Ministry for Petroleum & Natural Gas finds itself in. And something which it can itself decide on, it has passed it on to a ministerial panel for gas allocation, and Cabinet for pricing.

Today, neither the officials nor the Ministers’ at the helm of affairs in the Ministry want to take this decision on their own. Reasons – fear of CAG, fear of political allegations, fear of being quoted as siding with one corporate entity.

So, what is the best way forward?

Strictly go by the production sharing contracts, which the Government has entered into with contractors for exploring, developing, and producing oil and gas.. But, it is easier said than done.

Public sector entities sell gas at a regulated price. Private retailers on paper sell at the price discovered, through an arms-length mechanism. The reality could be different. Then there is imported gas price.

Currently, domestically produced gas is sold in the range of $4.2-$5.75/mmBtu, spot (imported gas) at $13-$14/mmBtu and long-term contract $11.5/mmBtu. These prices are excluding local taxes and add-ons, like marketing margins and transportation tariff.

What is the best price for India, which does not have a matured gas market, is a million dollar question? Those for free market say allow market to determine the price. An ideal situation! But, can we afford it?

Required is a price that incentivises the oil & gas explorers, so that more money goes in exploiting reserves. But, simultaneously it should not lead to any kind of cartelisation. Attaining this twin objective is a huge task.

Is it doable? Yes. Is it easy? No. As any change in gas pricing will also have a direct impact on power and fertiliser sector.

Then what can the Government do? It can have a clear policy, and follow it. Take decisions. Consumers today are mature, explain to them, and they understand. Do not trivialise or politicise the issue. And, finally, take the decision now before it is too late.

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Published on June 14, 2013
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