EC Puts Gas Price Hike On Hold

NEW DELHI: The revision in natural gas prices will have to wait, with the Election Commission on Monday asking the petroleum ministry to defer the proposal in view of all relevant facts, including pendency of the matter in the Supreme Court.

In a terse, four-line reply to the petroleum and natural gas ministry's March 14 proposal seeking EC nod for notifying the revised gas prices for the April-June 2014 quarter, principal secretary with the EC K Ajaya Kumar said "after taking into account all relevant facts, including the fact that the matter is sub-judice in the Supreme Court, the commission has decided that the proposal may be deferred".

Incidentally, just before directing the government to defer the hike, the commission had sought clarifications from the petroleum ministry on whether they were seeking the EC's go-ahead for only notifying the new parameters for gas pricing or also raising the gas price. The oil ministry is said to have clarified that approval was sought to notify the new pricing regime from April 1 for all private and public sector natural gas producers, under which rates would be increased to $8.3 per million British thermal units next month from the existing $4.2 per million British thermal units.

The EC's decision deferring the gas price revision comes a couple of days after chief election commissioner V S Sampath hinted at a press meet in Lucknow that it would not make much of a difference were the gas price hike to wait for two more months.

Sampath was asked to spell out EC's stand on the proposed gas price hike in the wake of AAP chief Arvind Kerjiwal's letter to the commission requesting it not to allow the same. Kejriwal had alleged that prices were being revised to favour Reliance Industries.

CPI leader Gurudas Dasgupta and an NGO had filed a petition in the Supreme Court challenging the rate hike. The apex court is to resume hearing on the issue from Tuesday.

The decision to revise gas prices from April 1, 2014 was taken in June 2013 and notified on January 10 this year. However, with the polls being announced on March 5, the oil ministry had approached EC on March 14 for permission to announce the new price.

The EC on Monday wrote to petroleum secretary Saurabh Chandra saying since the matter was sub-judice in the Supreme Court, a decision on revision in gas prices may be deferred.

The decision would delay the revision until after the elections, allowing the next government to take a final call in the matter.

While today's decision by EC will not have any bearing on 80 per cent of the gas sold in the country as producers like ONGC will continue to sell the fuel at existing rates and contracts, it would mean current sales contracts entered by RIL will have to be extended beyond expiry of their term on March 31.

RIL sells less than 14 million standard cubic metres per day of gas to over a dozen fertilizer plants at $4.2 rate under a five-year contract that started April 2009. It had wanted to sign new contracts under the new price from next month.

AAP welcomed the EC's decision. Describing this as a "dishonest decision" by the UPA, AAP said the price hike "was solely aimed at providing huge undue benefits to RIL and would have resulted in a loss of more than Rs 54,500 crore to the national exchequer."

The party in a statement said it would expose further links between Reliance and BJP-Congress combine.