SC to look into gas price hike

Doubling the price of natural gas by the government would now be judicially examined by the Supreme Court. 

On Monday, the apex court sought a response from Petroleum Minister Veerappa Moily over shelling out more money to Reliance Industries Ltd (RIL) for extraction of natural gas from the Krishna-Godavari (KG) basin.

A three-judge bench presided over by Chief Justice P Sathasivam also issued notices to RIL and Niko, the two companies exploring natural gas from the KG-D6 fields.

The court was hearing a PIL filed by CPI MP Gurudas Dasgupta and former power secretary E A S Sarma seeking direction to the companies to relinquish KG basin areas as per the recommendations of the Comptroller and Auditor General (CAG) report and pointed out by the Director-General of Hydrocarbons (DGH). Admitting the PIL, the court also sought replies from all parties within four weeks.

Both Dasgupta and Sarma sought the court’s intervention alleging arbitrary raising of prices despite several objections. “At the moment, we want to examine the prayers in the petition.

The issue has been brought to our notice by a senior Member of Parliament. We don’t want to dismiss it in limine (at initial stage),” the bench, also comprising Justices Ranjana Prakash Desai and Ranjan Gogoi, said.

Appeared for RIL, senior advocate Harish Salve took the notice on behalf of the company.

Senior counsel Colin Gonsalves, appearing for the petitioners, referred to Moily’s reported insistence for doubling the price, contrary to the view of senior officials and his predecessor.

“While the CAG and DGH say that RIL and Niko should relinquish the KG basin, the minister expresses his happiness with their continuance. This court must interfere in this situation and examine the decision-making process,” he said.

Gonsalves sought an independent team of experts for looking into the real cost of gas at the KG basin and its capacity. Coming out of courtroom, Dasgupta said that he was forced to approach the apex court since the prime minister had failed in giving a satisfactory response to his letters.

The PIL has challenged the government’s decision to increase the price of natural gas from $ 4.2 per million British thermal unit (mbtu) to $ 8.4 mbtu with effect from April 1, 2014.

“The decision to price gas in dollar terms was both irrational and malafide particularly because the entire domestic gas production is consumed in India and the falling value of rupee as compared to the dollar resulted in excessive prices and profits for the contractors,” the petition claimed.

The PIL has also sought direction for appointment of a third arbitrator to the dispute between the RIL and government for former’s alleged breaching the Production Sharing Contract (PSC) and failure to comply with the approved plan.

This resulted in heavy loss of production and loss to the government and of a scarce natural resource to the nation. The petition has asked for disposal of the arbitration proceedings within 6 months.