Amidst a row over his ministry’s proposal to raise natural gas prices, Oil Minister M Veerappa Moily on Wednesday said the revision in rates was a contractual requirement which will help remove policy uncertainty and spur investments that have almost dried up.

With domestic and international companies as well as the government’s technical advisor DGH finding the current rate of $ 4.2 uneconomical to produce gas from deep-sea fields, Mr. Moily has proposed to price all domestic gas at a uniform rate suggested by a panel headed by Prime Minister’s economic advisor Dr. C. Rangarajan.

“Investors want to know the direction we are going in before they can plan investments. If we shrink our responsibility, no investment will come,” Mr. Moily said in an interview.

India has vast resources that can help cut $ 160 billion oil import bill but without the right pricing and policy regime, resources will remain trapped inside earth, he said.

He has proposed raising prices to at least $ 6.775 per million British thermal unit for both PSU companies like ONGC as well as private firms like RIL.

Asked about the move being seen by CPI leader Gurudas Gupta as favouring RIL, he said, “I as Law Minister ensured that natural resources like gas are declared as sovereign right of the nation. This battle was fought against Reliance and they say I am supporting Reliance.”

Stating that price revision was a contractual requirement, Mr. Moily said while the new pricing will apply to state-owned firms this year, RIL will get the new rates only when its revision is due in April next year.

“We are modifying the Rangarajan committee suggestion. We are not even giving what has been recommended. We are giving little less than that and that too has to be considered by the Cabinet Committee on Economic Affairs (CCEA),” he said.

DGH has rejected as economically unviable proposal of companies like RIL for developing gas fields at $ 4.2 per million British thermal unit.

“Gas pricing is an issue. Investors don’t want to invest unless we tell them the path we are going to follow,” he said, adding Rangarajan panel suggested pricing will be valid till end of 12th Plan and thereafter a market driven regime to be recommended by a separate committee will come in play.

He said his Ministry has lowered the price that Rangarajan committee had suggested in the interim to market pricing. All domestic gas, conventional and unconventional, is proposed to be priced on a quarterly average of international hub price and actual cost of imported LNG, which currently comes to $ 6.775.

Mr. Moily said the opposition to gas price revision those who want India’s oil import bill should not come down. “I don’t think any patriotic person will agree to this. We have to live with vagaries of international prices for how long,” he said.

“Uncertainty and ambiguity are the biggest a dampener for the investors,” Mr. Moily said.