Deferring new gas price will hit industry investment: CII
Posted on Mar 25 2014 | IANS
New Delhi, March 25 : The Confederation of Indian Industry (CII) Tuesday voiced concern over the Election Commission's (EC) decision to defer operationalising the government's decision on increasing gas prices, saying it would affect investments in oil and gas.
"CII expresses its concerns and reservations on the EC's decision to defer the government's proposal on gas prices as it would go against the stated government policy and adversely impact investment decisions of the oil and gas industry," the industry lobby said in a statement here.
The EC had Monday asked the government to defer notifying the new, and likely doubled, price of natural gas produced by companies such as Reliance Industries (RIL) till after the general elections are completed.
"We would like to reiterate that it is only a computation decision where the formula is pre-fixed on the basis of a cabinet decision. The decision to hold back price revisions could have a long term impact on the investment climate in this crucial sector," said CII president Kris Gopalakrishnan.
Pointing out the contradictory nature of the EC order on gas prices, which was notified Jan 10, 2014, around two months before the model code of conduct came into effect on March 5, CII said: "To keep gas prices suppressed at the existing level, which is almost at half of the estimated revised prices, would come as a bonanza for poll-bound consumers, which by itself may be treading on the model code of conduct."
The new gas price approved by the cabinet and based on a formula suggested by the C. Rangarajan Committee would result in a doubling of the current rate of USD 4.2 per unit, that for RIL gas expires on March 31.
Meanwhile, Petroleum Minister M. Veerappa Moily reportedly said Tuesday that the nation's Solicitor-General or Attorney-General would examine the EC order.
He also warned that deferring the price hike will have a big impact on the investment climate, and would result in the petroleum subsidy going up if production is hit.