People's Democracy

CITU Urges Administrative Pricing

Of Natural Gas From KG Basin

The following is the text of the statement issued by the CITU secretariat on June 21, 2007

THE Centre of Indian Trade Unions (CITU) notes with grave concern that a private gas producer, is being given a free hand by the ministry of petroleum to fix the pricing of natural gas from KG Basin, which has a direct bearing on cost of fertiliser and power. Taking advantage of present gas-shortage scenario, it is reportedly benchmarking the gas price to about 5 dollar per million btu (british thermal unit) as against prevailing administrative price of 2 dollar per million btu approx, supplied to 85 per cent of the consumers at present by ONGC/OIL. Such hike of gas price, if approved, will be passed on to common man by the power industry and to government exchequer by fertiliser industry through increase in quantum of subsidy, to annul the increase in production cost of power and fertiliser.

The CITU deplores the attempts to abdicate government responsibility under the cover of “market determined” price. CITU points out that private gas producers who were awarded gas fields for exploration under New Exploration Licensing Policy (NELP), are merely contractors and not owners and they are bound by the Production Sharing Contract (PSC). As per Clause 21.1 of PSC, government can formulate its policy before permitting gas sales with the objective to develop its resources in the most efficient manner.

The CITU further alleges that the petroleum ministry is ignoring Clause 21.6.2 (b) of PSC, which empowers the government to fix the price of the gas sold to government or other government nominees. As per PSC, CITU strongly feels, private contractor has no business to fix gas price for power and fertiliser PSUs, which are government nominees.

The CITU therefore calls upon the prime minister to immediately intervene and direct APM pricing of gas from KG Basin for power and fertiliser units, which are basic utilities for common good, in line with Article 39 (2) of the directive principles of Constitution to ensure ownership and control of material resources of community to subserve the common good.