People's Democracy

OIL AND NATURAL GAS

Production Cost Appraisal

Immediately Needed

ON April 18, 2012, through a letter written to Jaipal Reddy, the minister for petroleum and natural gas, Rajya Sabha member and CITU general secretary Tapan Sen raised the issue of a cost based study of petroleum products of the national oil marketing companies.

It said the Department of Expenditure under the Ministry of Finance had asked the Tariff Commission for a cost based study of petroleum products of national oil marketing companies. Though the Tariff Commission had been given the target date of July 2011 for submission of its study report, it appears that it has not accomplished its task so far.

In view of this fact, Sen urged the minister to get a copy of this report for circulation among the members of parliament for the sake of a better understanding of the subject of pricing. However, there is an immediate need for appraisal of actual cost of production of crude oil and natural gas in upstream public sector oil companies like the ONGC and OIL, and their joint ventures, which can be the benchmark for assessing the cost of indigenous crude oil and gas produced by both public and private sector companies.

The letter urged that the ministry must refer the cost appraisal study of national upstream oil companies to the Tariff Commission immediately. It said our natural resources within the country, owned by the people and run by government companies, cannot be priced at par with the globally traded international oil and gas prices.