Moily claims import lobbies threatening ministers - Livemint

Updated: Fri, Jun 14 2013. 05 05 PM IST New Delhi: Petroleum minister M. Veerappa Moily said on Friday that import lobbies were trying to exert influence on India—and even intimidating ministers—not to raise the domestic prices of gas and not to reduce overseas purchases. In an interaction with journalists, Moily also said bureaucratic delays had impeded India's hydrocarbon exploration efforts. "There are bureaucratic delays and lobbies. Every minister is threatened. There are import lobbies," Moily said in New Delhi. The minister, who did not identify the lobbies, said an investment of around $101 billion had been made outside of India because of inordinate delays. The minister said he wouldn't be cowed by pressure from lobbies. "Moily can't be threatened," he said. The minister's remarks come against the backdrop of an allegation by Communist Party of India (CPI) leader Gurudas Dasgupta that Moily had helped the Mukesh Ambani-controlled Reliance Industries Ltd to increase the price of gas produced from the KG-D6 gas field. They come at a time when there is a growing interest in the Indian liquefied natural gas (LNG) market among global companies given the demand for scarce fuel to run industries such as power generation, fertilizer and steel, among others. Moily said he had called Dasgupta but the latter was not prepared for a discussion. The petroleum ministry has proposed an increase in the price of gas to $6.7 per mmBtu (million British thermal unit), he noted. It is for the cabinet committee on economic affairs to decide "whether to increase it or decrease it," Moily said. An RIL spokesperson declined to comment. The new price has been suggested on the basis of recommendations made by a committee headed by the Prime Minister's economic adviser C. Rangarajan. The new prices will be applicable from 1 April, 2014. This price will change in the 13th Plan (2017-22) and will be decided upon as per the recommendations of a committee headed by former finance secretary Vijay Kelkar. Currently, while gas available under the administered price mechanism and new exploration licensing policy (Nelp) is sold at $4.2 mmBtu, inclusive of royalty, that available under pre-Nelp contracts is sold at an average of $5.24 per mmBtu. Gas producers typically get a better price in the spot markets than through long-term contracts. The LNG price in the spot market varies between $16 and $18 per mmBtu. "The CCEA note (on gas pricing) has been recirculated…Investors should come. We need to give them the right price," Moily said. LNG is transported in liquid form by ship and needs to be converted into gas before it is used. India has only two functioning LNG regasification terminals, both in Gujarat. One is owned by Petronet LNG Ltd and the other by Shell India. Apart from the terminals at Dabhol and Kochi, nine additional LNG terminals are being planned on India's east and west coast to cater to the growing demand for the fuel. In another development, Moily said that with imported ethanol prices being quoted at around Rs.70 per litre to Rs.91 per litre, he had scrapped a tender for imported ethanol. In comparison, domestic ethanol is available within at Rs.38-45 per litre. In response to the government-owned oil marketing companies' tender for the ethanol blending programme, bids for 550 million litres were offered. "The price of imported ethanol is very high. There will be no import of ethanol, unless we get competitive price. For another round, we go for both domestic and global tender," Moily said. In response to a question about the weakening of the rupee affecting the government's decision to increase diesel prices in the range of 40-50 paise per month, Moily said: "We haven't taken a decision yet…I am confident that fundamentals of Indian economy are strong. Rupee depreciation is a short-term phenomenon." The under-recovery on diesel, or the loss of revenue for selling fuel below cost borne by the oil marketers, is Rs.5.5 per litre. Every depreciation of Rs.1 against the dollar results in a burden of Rs.9,000 crore on the oil marketing companies. India imports 80% of its crude oil and 25% of its natural gas requirements. India's demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) today, to around 1,500 mtoe, according to the oil ministry's estimates. The government has set up a committee headed by Kirit Parikh, former member, energy, in India's Planning Commission, to solve the vexed issue of pricing diesel, domestic cooking gas and subsidized kerosene. While the finance ministry is in favour of export-parity pricing to reduce its subsidy burden, the petroleum ministry is in favour of the current practice of trade parity. The current method calculates the so-called under-recoveries as the difference of the import and export prices of petroleum products on an 80:20 ratio, as India imports 80% of its oil demand. Under the proposed export-parity pricing, oil marketers will be compensated the difference between the domestic and export prices of oil products. Moily said that a shale gas policy will be placed before the cabinet within the next 25 days. Also, the note for the new coal bed methane policy has been circulated before the cabinet. In a significant development, Moily reiterated the country's intention to engage with Iran in the context of India's growing energy needs. "We are seriously engaging with Iran. Our oil diplomacy has seriously picked up," Moily said. In the first such instance since the 1979 revolution that overthrew the monarchy in Iran, the Gulf country has offered a production-sharing contract (PSC) to Indian firms to develop the Farzad-B gas field in its offshore Farsi block, but local firms are non-committal because Iran faces sanctions due to its nuclear programme. After India and the US signed a civilian nuclear deal in 2008, several Iran-related Indian projects have either been put on hold or dropped. via Top Stories - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHVhCUwRizOBdnW_stsGrVl948idA&url=http://www.livemint.com/Industry/fOo8TJNrK4ZWf2gEZW7zzM/Iran-crude-costs-India-2-less-than-global-prices-Veerappa.html

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