Joint
statement issued by the Left Parties in view of the move of the
government to increase the prices of Natural Gas from the KG-D6 Basin.
1.
The government is going to increase the prices of natural gas, which is
a major input for the production of fertilizers and power, in the
country. The present price of natural gas in $4.2 per mmbtu. The
government appointed Rangarajan Committee has suggested a price of $8.4
per mmbtu from April 2014. While the power and fertilizer ministries are
opposed to the recommendations of the Rangarajan committee and are
pitching for a lower price, the Petroleum Ministry, Finance Ministry and
Planning Commission are insisting on a price even greater than the
Rangarajan formula. Though the increase in prices would be applicable to
all producers, both PSUs and private companies, the super high profits
of private companies will be retained by them, whereas, government can
mop up the increased revenues of PSUs (and in theory at least, be used
to offset the increase in subsidy).
2. Petroleum Ministry has
agreed to the Rangarajan prices for three years and has recommended a
price of $14 per mmbtu (open market prices) for the last two years.
Finance ministry has recommended a price of $11 per mmbtu and Planning
Commission has recommended a price of $9.2 per mmbtu (on average) for
three years and $14 per mmbtu (open market prices) for the last two
years.
3. Considering a production of 50 mmscmd from KG-D6
block, even with the Rangarajan formula, the subsidy implications are
gigantic on account of natural gas produced from KG-D6 block. It would
imply an additional subsidy of Rs.90,000 crore in the five year period
(2014-15 to 2018-19) over the current levels of fertilizer and power
subsidy. With the Petroleum, Finance or Planning Commission formula the
figure would increase further to Rs.1,38,000 crore, Rs.1,46,000 crore,
Rs.1,48,000 crore respectively.
4. With its stretched
finances, the government will not able to meet these subsidy
requirements and will perforce raise the prices of fertilizers and
power. Even with the Rangarajan formula the unit cost of power will rise
by Rs. 2 per unit. If the recommendations of Petroleum, Finance,
Planning Commission were accepted, this would imply an average increase
by Rs.3, Rs.3.2, R.3 .3 per unit respectively.
5. Similarly
with fertilizers the increase in prices with the Rangarajan formula
would be Rs.6000 per metric tonne. If the recommendations of Petroleum,
Finance, Planning Commission were accepted, this would imply an increase
Rs. 9200, Rs.9700, Rs.9900 per tonne respectively.
6. In the
backdrop of the slowdown in the economy and persistent inflation this
magnitude of price increase would deal a death blow to the Indian
economy and cause untold hardship to the people of the country and its
farmers. We demand that any price increase should be kept in abeyance
and the government should come out with full facts and figures and have
debate with all stakeholders before it pushes ahead with this move,
7.
It should also be noted that the entire price increase/enhanced subsidy
will be passed on to just a single corporate house as super normal
profits, since the profit share of the private operator is 90%. Natural
gas belongs to the people of the country and the government is holding
it in trust for the people. They cannot be plundered by the corporates
and actively be supported by the very arms of the government that are
supposed regulate them.
