 "PMO, OilMin battle curbs Kelkar panel power")
The Rangarajan panel, appointed by Prime Minister Manmohan Singh, has recommended moving to a revenue sharing model in exploration and production from the current production sharing model.
The terms of reference of the Kelkar committee had irked the PMO as the panel set up by the petroleum ministry was to review the recommendations of the committee appointed by the prime minister himself, said an official aware of the development, requesting anonymity.
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The petroleum ministry came out with the terms of reference of the Kelkar committee for the first time on February 15. The initial mandate of the committee was to come up with a road map to enhance domestic oil and gas production and to reduce import dependency by 2030.
However, on May 10, the drama kicked off when the ministry added two more clauses to the existing terms of reference and two more members were appointed on the committee. One of the new clauses entrusted the panel to give views on the recommendations of Rangarajan on moving from production sharing to revenue sharing, while the other asked it to come up with a road map for switching to market-determined gas prices at the end of the 12th Plan period (2012-17).
Within seven days, that's on May 17, the ministry had to remove the clause on looking into the revenue-sharing proposal, following pressure from the PMO. "The oil ministry was given specific instructions to remove the clause to look into Rangarajan's suggestions as it is a PM-appointed panel. Hence, it had to change it fast. However, regarding pricing, the Rangarajan committee report would be applicable only for three financial years starting from 2014-15," said the official.
The two new members in the committee are Raghuram Rajan, chief economic adviser in the finance ministry, and Anil K Jain, an official in the Planning Commission, who had earlier been joint secretary in-charge of exploration in the petroleum ministry.
The other members of the Kelkar Committee include Deepak Parekh, chairman of Housing Development Finance Corp; Ashok Ganguly, member of the Rajya Sabha; R S Sharma, former chairman of Oil and Natural Gas Corp (ONGC); Vikram Mehta, president, oil and gas, Confederation of Indian Industry; Arindam Bhattacharya, partner and managing director, Boston Consulting Group and S V Rao, director (exploration) of ONGC.
Recently, Kelkar had written a letter to the petroleum ministry, asking it to put on hold a decision on the Rangarajan committee's suggestion for moving to revenue-sharing model. Apart from this, the Rangarajan committee report was facing heat from the finance, power and fertiliser ministries over its recommendations on gas pricing.
The terms of reference of the Kelkar panel also included coming up with an institutional mechanism for appraisal of Indian sedimentary basins to the extent of 75 per cent by 2015 and 100 per cent by 2025 and a proposal on how to utilise an Oil Industry Development Board cess in improving production, apart from steps for development of gas transportation infrastructure.
The petroleum ministry is now batting for a $6.77 a million British thermal unit (mBtu) price for domestic natural gas being produced from Reliance Industries Ltd's KG-D6 block and a host of other fields from April 2014. The base price of domestic natural gas, according to the Rangarajan formula, is expected to go up to $8.8 a mmBtu from $4.2 now.
A MATTER OF PRICING
Feb 15, 2013: The petroleum and natural gas ministry comes up with the terms of reference (ToR) for Kelkar committee to look into enhancing domestic production of oil and gas and reduction of import dependency by 2030. Asks it to submit a report in six months
May 10, 2013: The ministry revises the ToR, adding two clauses:
i) One to give views on the recommendations of Rangarajan committee on moving to revenue-sharing model
ii) Another on switching to the market-determined gas price at the end of the 12th Plan period
It also appoints two committee members - Chief Economic Advisor Raghuram Rajan and Planning Commission member Anil K Jain
May 17, 2013: The ministry revises the ToR again and removes the mandate to review recommendations of the Rangarajan committee on moving to revenue-sharing model, following pressure from the PMO