statesman news service
NEW DELHI, 28 JUNE: Less than 24 hours after doubling natural gas price, Finance Minister P Chidambaram today hinted that power and fertiliser units may get gas at subsidised rates to keep electricity and urea costs down, a move that is intended to mollify the agriculture sector and power-driven industry.
Briefing the media on yesterday’s Cabinet meeting that went on late into the night, Mr Chidambaram today strongly defended the gas price rise from the current $4.2 to $8 per million British thermal unit. He said investment in domestic oil and gas hunt had dramatically fallen in absence of remunerative prices, resulting in a sharp dip in production that was being made up through costlier imports.
Due to decline in domestic output and rising consumption, the oil import Bill was becoming unsustainable, Mr Chidambaram said. “Decline in domestic production is resulting in rise in import of LNG. We have to produce more gas,” he added.
Clearly hinting at select subsidy, Mr Chidambaram said: “At the moment, we are fixing only output prices (rates payable to gas producers). This will indeed have an impact on the consumer, but those prices are not being fixed today.” The finance minister said the price power and fertiliser companies pay for gas is not being fixed now.
“What is the price at which it should be supplied to a power plant, to a fertiliser plant in order to make power affordable, fertiliser affordable… that can still be decided between now and 1 April (2014),” he said.
The minister stressed that the government was conscious of keeping power and fertiliser prices low.
“It could be tweaking prices or it could be bearing additional subsidy. There are various methods but at the moment we are not addressing those issues.”
He said high gas price would help attract investments in the sector.
“The gas pricing will promote investment in the sector and there is no reason to assume that prices will always increase,” he said.
Mr Chidambaram asserted that the government has not taken the decisions under pressure from the private sector.
“We are not being influenced by anyone… We are influenced by the economic reality to produce more gas,” he said.