Hiking gas prices is Pradhan's biggest challenge

Vol 17, PW 21 (05 Jun 14) People & Policy
     

Gas pricing is the most controversial issue given to new minister of state for oil Dharmendra Pradhan by former oil minister Veerappa Moily.

A well-placed BJP source says Pradhan's best option might be to set up a fresh committee to re-examine the formula worked out by the Rangarajan Committee, which would have seen the gas price rise from $4.2/mmbtu to at least $6.8/mmbtu, possibly more, from April 1, if it hadn't been for May elections. Pradhan has instructed officials to prepare a ‘fresh’ draft note on gas pricing, with inputs from the finance and law ministries.

Only then will clarity emerge. In private the minister is said to favour a regime that would allow market-benchmarked pricing for new gas finds and production but not for gas produced from established wells, setting him on a potential collision course with Reliance, Cairn and others.

“We've an unofficial target to resolve pricing in 90 days,” adds our BJP source. "There's pressure from the oil industry for us to make our stance clear.

This must be our top priority.” Yet he warns the BJP can't take the same line as the previous government: this would give ammunition to the opposition and hurt Prime Minister Modi's pan-India image.

Modi, we hear, wants to be remembered as a man who looks after the national interest, free from the influence of corporates like Reliance and Adani.