 "Gas price issue: Poll panel spikes Moily's attempt to raise rate")
On May 1, Moily had asked the poll panel to reconsider its decision to defer the raise, which was to come from April 1. "The minister felt if the price was raised after election results were out on May 16, it would be left to the officials to take a call. So, it was better that a decision was taken earlier. However, the poll panel has rejected it," confirmed an official close to the development.
Earlier this month, it was reported the new price of domestically produced natural gas might be notified by May 18, if bureaucrats decided to go ahead with the decision without the new minister's consent. This was confirmed by Moily the next day, saying the April 1 raise should be notified once the election process was over.
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The EC decision comes as a jolt to Reliance Industries (RIL), batting for a raise after the last day of polling on May 12. In a letter to the ministry, RIL batted for an early notification of price on May 13, saying it was necessary to avoid loss to all parties.
On June 27 last year, the Cabinet Committee on Economic Affairs (CCEA) had cleared the proposal to double gas prices to above $8 per million British thermal unit, based on the Rangarajan formula, with effect from April 1, 2014. Later, in December 2013, the CCEA again cleared the decks for RIL to avail of higher prices, provided it gave a bank guarantee to cover any shortfall in KG-D6 production (till it was proved there was no intentional hoarding of gas).
Based on this, the ministry had even come out with domestic natural gas pricing guidelines on January 10. Despite this, on March 25, the poll panel refused to go ahead with the hike showing legal reasons.
The move would have added Rs 12,000 crore to the annual revenue of Oil and Natural Gas Corporation (with a production of 60 million standard cubic metre a day or mscmd), of Oil India Ltd by Rs 1,500 crore (on eight mscmd production) and Rs 3,000 crore for RIL (13.11 mscmd).