Category: Alternative policy scenario

Gas policy – judiciary must not enter executive domain

Union government has received a notice from Supreme Court [SC] on a petition filed by Independent Gas-based Power Producers Association [IGPPA] seeking priority in allocation of gas produced from the Reliance Industries Limited [RIL] operated Krishna – Godavari [K-G] basin. IGPPA has contended that the gas allocated from KG basin was not allotted to them on priority basis but was given to fertilizer units. Besides, they wanted a direction to the Central government to frame a policy for country’s energy security. Federation of Farmers Associations [FFA] has also filed a public interest litigation [PIL] demanding more allocation to power sector so as ensure “adequate” electricity supply to farmers. Major companies in steel sector viz., Essar Steel, Welspun Maxsteel and others...
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‘Premium’ pricing of gas – is government falling in to a trap?

In August, 2014, Modi – government had set up an inter-ministerial committee of secretaries (CoS) under chairmanship of secretary, ministry of petroleum and natural gas (MPNG) to recommend a new structure of pricing domestic gas. The committee submitted its report on September 16, 2014 Guidelines for pricing domestic gas Based on its recommendations, on October 18, 2014, cabinet committee on economic affairs (CCEA) approved guidelines for pricing of all domestic gas [except supplies from fields awarded prior to NELP (new exploration licensing policy) where PSC (production sharing contract) did not provide for approval of price by government] based on ‘modified’ Rangarajan formula. Nicknamed after Dr C Rangarajan, chairman, economic advisory council to prime minister [he headed a committee on gas...
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Debate – Should gas prices be raised as per Rangarajan plan?

While a price hike to about $8/mmBtu from $4.2 at the moment will increase fertiliser production costs and subsidies, even this hike will not be enough to bring in new investments or prop up gas production from existing fields Uttam Gupta Gas is a natural resource which is ‘inherently’ more energy efficient. It is much cleaner and environment friendly and requires less investment, and is much sought after. It is also most preferred for production of fertilisers. About 80% of urea capacity in India is based on gas. The rest on fuel oil and naphtha is being switched over to gas. A spate of projects under new urea investment policy (UIP) are also based on natural gas. The viability of...
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Crippling effects of oil subsidies

A lesser known aspect of the much talked about oil subsidies is the unprecedented ‘liquidity crunch’ that oil PSUs viz., IOC, HPCL and BPCL, face perennially. Subsidies are administered through these undertakings. Under instructions from the Government, these PSUs sell kerosene, LPG and diesel at low prices (prior to June 2010, price of petrol was also regulated). How is the excess of cost over selling price covered? Oil and gas PSUs contribute 40 per cent of differential amount by way of discount on crude supplies. The Government is supposed to reimburse 60 per cent as subsidy. However, it rarely meets its commitment in full! RISING UNDER-RECOVERIES Thus, during the first nine months of 2012-13 fiscal (April-December 2012), these PSUs had...
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