AP's 'Oman' dream stuck in pipeline

DELHI DARBAR

It was former Petroleum Minister Mani Shankar Aiyer who had once remarked to Andhra Pradesh Chief Minister YS Rajashekhara Reddy that if his state were an independent country, it would rival Oman in prosperity.

The potentials offered by the huge natural gas reserves in AP today form the foundation of Reddy's vision of a gas-based economy with gas-based power plants, fertiliser units, etc. He would like every household in the state to have gas connection, every vehicle to run on CNG.

With this dream, he lands up at least once and often twice every month in New Delhi, making the country's capital his second home.

In his meetings with Prime Minister Manmohan Singh and other Union ministers, one of his major demands has been the appointment of a statutory regulator to fix the price of domestically produced natural gas and not to increase the current gas price.

Any increase in price will not only jack up the cost of gas-based power plants in the state but will also make it difficult to continue providing free power to farmers and cheap power to industries. Thanks to the discoveries in Krishna-Godavari basin, the government is planning to set up a state-wide gas grid, which will supply domestic gas at 50 per cent of the price of LPG.

"We are making efforts to develop industries with the help of a huge quantity of natural gas available in the Krishna-Godavari basin. We are preparing a plan to establish a natural gas grid in the state," Reddy told Business Standard.

The CM, fondly called YSR, has so far failed to wangle any promise from the Centre for a regulator to fix the cost of natural gas to prevent monopolistic practices by producers. Nor is there any assurance forthcoming on the state's demand for royalty from offshore production.

But the Andhra Pradesh CM has not given up hope yet. At the Congress CMs' conclave in Nainital recently, the PM had showered praise on the AP CM for his implementation of irrigation schemes and asked other CMs to learn from the AP counterpart how to tackle Naxalism.

Reddy later made a Power Point presentation on how his government had succeeded in bringing the incidence of farmers' suicide to zero. That was even before the Centre had announced a rehabilitation package worth over Rs 9,000 crore for 16 suicide-affected districts of the state.

According to Reddy, his predecessor Chandrababu Naidu had focused on services sector only, neglecting agriculture and manufacturing. The incumbent CM seeks to rectify the errors committed by his predecessor.

YSR is also lobbying with the PM to persuade the Oil and Natural Gas Corporation (ONGC) to fulfil its commitments, as made in the MOUs signed between its subsidiary MRPL and AP Industrial Infrastructure Corporation for promotion of Kakinada Special Economic Zone and to invest Rs 7,500 crore in a refinery.

The ONGC was believed to have developed cold feet on these projects recently, although there is no official word on it yet.

The AP CM's request to the Centre for announcement of a suitable package of incentives for FAB units has also not been granted yet. The AP had earlier pipped Tamil Nadu and Karnataka to bag $3 billion FAB city project.

The state government is expecting many more proposals and is, therefore, eager to get the Centre to declare how it plans to support FAB city projects.

Last but not the least, the state government has been pressing the Centre to offer similar incentives, including tax exemptions to one most backward district in each of the three regions of coastal Andhra, Telangana and Rayalseema, as are being offered in Uttaranchal and Himachal Pradesh to promote manufacturing industries.