Prashant Bhushan, Aam Admi Party leader and activist lawyer has sought the Supreme Court’s urgent intervention to stop the increase in natural gas prices, stating that the new prices would enrich Reliance Industries and hurt the people of the country, on whose behalf the state is a trustee of natural resources, as ruled earlier by the top judicial authority.
Bhushan, representing NGO Common Cause, said the government’s decision should be stayed at least for not many but for few months so that the new government after the elections, which will bear the consequences of higher gas prices, can look at the matter afresh.
Previously, Bhushan had filed a petition challenging higher gas rates. It was listed for March 4 but it could not be taken up.
The NGO said in a statement that the matter is listed for hearing next Tuesday. It said RIL had written to the directorate general of hydrocarbons on May 22, 2009 giving its cost calculations which illustrate that the cost of production is less than $1 per mmbtu.
Furthermore, it had offered natural gas to NTPC and the Anil Ambani group for $2.34 per unit for 17 years. “Evidently, the demand for an increase in gas price was motivated by RIL’s greed and not by any cost considerations,” it said.
The oil industry and the government have difference of opinion that no company would explore India’s deep-water regions if they are not allowed market-linked prices. This would only egg on the import of LNG that costs double the new domestic price, they say.
RIL, its partner BP that holds30% in Reliance-operated blocks, and ONGC have argued that many fields will be unviable at the current price. Some ONGC fields would be feasible only at $11. The petition argues if this is the case, then only new fields should charge the new price.
“The nation can always pay a higher price for more difficult horizons,” the petition says.
Reliance Industries has quarreled in its affidavit that since it produces only 15% of the country’s gas, it cannot be said to be the major beneficiary of the price increase. This argument is not acceptable since this 15% share is due to deliberate under production by RIL in violation of its field development plans and undertakings.
Furthermore, the KG basin is capable of producing much more if the PSC with RIL is cancelled and the entire field is put to auction.
As said by Reliance that gas output fell because of geological reasons and has initiated arbitration against the government’s decision to penalize it for the fall in output RIL and BP say that initial estimation of output are not binding commitments and the actual production has turned out to be different in many fields across the world.