Moily says govt cant be timid on gas price hike

Written by Press Trust of India | Mumbai | Updated: Jul 27 2013, 16:38pm hrs
Defending the decision to double gas prices from next fiscal, oil minister M Veerappa Moily on Friday said the government cannot afford a "timid mindset" while taking policy decisions of national importance.

"We cannot be afraid of the ghosts of 2G, CBI, CAG, (when we take decisions of national importance)," he said addressing an oil conference here.

In the aftermath of a string of scams in telecom spectrum and coal block allocation, the bureaucracy has been very cautions in taking decisions and on may occasions put off decisions for fear of being criticised by CAG, CVC or CBI.

"Bureaucracy needs to be operated by giants and not pygmies," he said. "We have to destroy bureaucratic delays and focus more on delivery rather than processes."

"We don't have the giants like Exxon, except BP, coming to India. Nobody is coming. That is because of our timidness to take decisions... what we need is boldness," he said. The government's decision late last month to double natural gas rates to $8.4 per million British thermal units from April 2014 had come in for sharp criticism as it would lead to sharp rise in urea and power production cost and was seen as benefiting Mukesh Ambani-run Reliance Industries.

Moily, however, defended the move saying it would help bring to production at least 3 Trillion cubic feet, or equivalent to RIL's currently producing fields in KG-D6 block. Everything has a price and you have to give the price,"he said. "Over 3 Tcf of discovered gas reserves are not being developed as they are not viable at $4.2 (per mmBtu)."

Moily said even upstream regulator, the directorate-general of Hydrocarbons (DGH) had not approved commercial production from several of the discoveries as they were not viable at current rate of $4.2.

"In future, nobody will come if gas prices are not revised. We have come to a grinding halt. We are not ready to pay $6.8 (per mmBtu) in India but are importing (LNG) at $17," he said.

With government deciding to price all gas in the country at the Rangarajan formula of an average of imported LNG cost and international gas hub rates, this will help improve gas production in the country, Moily said.