S. Nagesh Kumar
Planners have much to cheer over Supreme Court ruling
They are pleased with the clarity lent by the judgement to the entire issue of pricing of gas
Infrastructure for supplying gas to households through pipelines is indeed an issue
HYDERABAD: Andhra Pradesh's planners have much to cheer over Friday's Supreme Court ruling in the feud between the Ambani brothers over pricing of the gas from the Krishna-Godavari offshore field as it will open doors for gas allocation for new projects.
They are pleased with the clarity lent by the judgement to the entire issue of pricing by declaring gas as ‘a national resource' and affirming the Government of India's power to regulate its supply and distribution. It was exactly these twin issues that late Y.S. Rajasekhara Reddy had cried hoarse about and which the Centre, being on a defensive mode, was reluctant to accept.
The A.P. government is now confident of convincing the Centre to allot gas from RIL's KG basin reserves for the proposed 2,100 MW power station at Karimnagar, piped gas supply for towns and cities across the State and for opening more CNG stations. Apart from the obvious benefit of reducing consumption of the heavily subsidised petro-based fuels, natural gas, being a cleaner fuel, will also be good for protecting the environment.
Infrastructure for supplying gas to households through a network of pipelines is indeed an issue. But, two consortia – KG Gas Network Limited (KGGNL) and Bhagynagar Gas Limited – are already in place and they have now to push the Petroleum & Natural Gas Regulatory Board (PNGRB) for statutory clearances.
At present, KG basin gas is being supplied to Nagarjuna Fertilizers, Kakinada, and power projects with a combined capacity of 3,100 MW.
Mr. D.A. Somayajulu, Advisor to the Government (Economic Affairs), who counselled YSR during the imbroglio with RIL from 2007 to 2009, recalled how the then government challenged RIL's contention that it could sell gas produced from KG basin D-6 Block at ‘the market discovered price'. “There have to be multiple suppliers and purchasers to constitute a market but there were none. Here, we argued, RIL alone would supply the gas,” he added.
“The production sharing contract (PSC) between the GOI and RIL gave an impression that market economy would dictate the price. But, we believed there should be public regulation of a national resource since it would have huge ramifications on the economy and impact even food and energy security.
“After YSR wrote nearly a dozen letters to the Prime Minister, the Empowered Group of Ministers headed by Pranab Mukherjee was constituted.”
How about the Supreme Court upholding the price of $ 4.2 per million metric British thermal unit (mmBtU) payable by RNRL? YSR had put immense pressure on the Centre to fix the price at $2.34 per mmBtu.
Would the State government seek reconsideration of the price? “Every interested party can question the pricing and the Centre will now be under obligation to act transparently,” Mr. Somayajulu added.