Defending the decision to double gas prices from next fiscal, oil minister M. Veerappa Moily 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),” Moily 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 may on occasions put off decisions for fear of being criticised by CAG, CVC or CBI.
“Bureaucracy needs to be operated by giants and not pygmies,” Moily 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,” Moily 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 three 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. Over three trillion cubic feet of discovered gas reserves are not being developed as they are not viable at $4.2 (per mmBtu),” said Moily.
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,” Moily 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.
The price as per this formula currently comes to $6.83 but in April when it is to be implemented, it would be around $8.2-8.4.
“If volumes increase and more investments and latest technologies come into the sector, gas prices may even come down in the future,” Moily said. “I would like to say that either produce oil and gas or perish. There is no intermediate way.”
Oil imports stood at Rs 5.27 lakh crore in FY’13 and it needs to be asked for how long such high levels can be sustained, Moily said.
The oil minister also said he has met executives of the state-run oil and gas companies a fortnight ago and asked them to increase their capital expenditure. He will be meeting them again in the next few days to prepare a roadmap to achieve the same, Moily said.