While the self-certified/styled crusaders of honesty and anti-corruption have got yet another story (though not in their manifesto) to publicise and sensationalise upon, it is essential to understand certain facts and issues surrounding that before we jump into the bandwagon. Yes this is about Kejriwal’s new FIR(e) on old (and possibly stale) but natural “gas”.
1. The case is not a new one and “discovered” by AAPis, as a CBI investigation is already going on, Gurudas Dasgupta of CPI and Left as a whole front have been on it for eons since the CAG report had come in, and an arbitration is going on between the parties involved. While we can always put more pressure to expedite in finding the truth, to declare that we know the truth already even before it is found, is at best expediency, political or otherwise!
2. The tariff revision on Gas was not declared yesterday. First there was an Empowered committee of Ministers who fixed it and then an expert committee led by C. Rangarajan worked on this and they had explained the rationale on why a revenue share model is better for everyone than a cost plus model. The new tariff to be effective from 1st April was known much before, even before the Dehi elections.
3. Tariff is to be determined by market forces, including the alternates available (like imports) if this gas is not available. Just because Gas belongs to us the people of this country, it does not necessarily find its way to our homes by itself.
4. The tariff model should also look at how to capture the economies of scale and capacity utilisation, besides incentivising new investments to boost production by getting the best in the business to get the gas discovered and delivered to us. The main purpose of fixing tariffs should not be to subsidise because gas is our own!
5. KG basin is one of the toughest, both environmentally and from geotechnical features to explore and produce hydrocarbons as acknowledged by many experts in the field and that too doing it in deep water offshore is no joke. There are not enough indigenous sources of expertise, equipment or technology to go and find the gas and get it to shore and all that costs in Dollars (not in Rupees). It is easier to argue in a newsroom that it is our gas and it is to be used by us, why it should be pegged to any international index but another story to go get it by spending Indian rupees.
6. If everything is hoax and gold plated “gas” international players like BP need not simply fall for it, even if some corrupt officials could.
Having said that, what the nation really wants to know and should be asking is why the hell the gas production in KG D6 is going down. Is it because of the technical glitches as claimed by Reliance (like water ingress into their wells) and if so why did it happen, or is it a deliberate slowdown to hike tariff as some are claiming, or is it some other factors like more capital cost is actually required to be spent given the challenges involved. If gas has flowed as was projected initially, many of these issues would not have been raised in the first place and a stronger case would have been there for a lower tariff anyways due to better capacity utilisation and hence lower costs. Until the experts and the investigating agencies dig that out (and hopefully not make it another Aston Martin case) let us not add more gas in the form of conjectures.
While the self-certified/styled crusaders of honesty and anti-corruption have got yet another story (though not in their manifesto) to publicise and sensationalise upon, it is essential to understand certain facts and issues surrounding that before we jump into the bandwagon. Yes this is about Kejriwal’s new FIR(e) on old (and possibly stale) but natural “gas”.
1. The case is not a new one and “discovered” by AAPis, as a CBI investigation is already going on, Gurudas Dasgupta of CPI and Left as a whole front have been on it for eons since the CAG report had come in, and an arbitration is going on between the parties involved. While we can always put more pressure to expedite in finding the truth, to declare that we know the truth already even before it is found, is at best expediency, political or otherwise!
2. The tariff revision on Gas was not declared yesterday. First there was an Empowered committee of Ministers who fixed it and then an expert committee led by C. Rangarajan worked on this and they had explained the rationale on why a revenue share model is better for everyone than a cost plus model. The new tariff to be effective from 1st April was known much before, even before the Dehi elections.
3. Tariff is to be determined by market forces, including the alternates available (like imports) if this gas is not available. Just because Gas belongs to us the people of this country, it does not necessarily find its way to our homes by itself.
4. The tariff model should also look at how to capture the economies of scale and capacity utilisation, besides incentivising new investments to boost production by getting the best in the business to get the gas discovered and delivered to us. The main purpose of fixing tariffs should not be to subsidise because gas is our own!
5. KG basin is one of the toughest, both environmentally and from geotechnical features to explore and produce hydrocarbons as acknowledged by many experts in the field and that too doing it in deep water offshore is no joke. There are not enough indigenous sources of expertise, equipment or technology to go and find the gas and get it to shore and all that costs in Dollars (not in Rupees). It is easier to argue in a newsroom that it is our gas and it is to be used by us, why it should be pegged to any international index but another story to go get it by spending Indian rupees.
6. If everything is hoax and gold plated “gas” international players like BP need not simply fall for it, even if some corrupt officials could.
Having said that, what the nation really wants to know and should be asking is why the hell the gas production in KG D6 is going down. Is it because of the technical glitches as claimed by Reliance (like water ingress into their wells) and if so why did it happen, or is it a deliberate slowdown to hike tariff as some are claiming, or is it some other factors like more capital cost is actually required to be spent given the challenges involved. If gas has flowed as was projected initially, many of these issues would not have been raised in the first place and a stronger case would have been there for a lower tariff anyways due to better capacity utilisation and hence lower costs. Until the experts and the investigating agencies dig that out (and hopefully not make it another Aston Martin case) let us not add more gas in the form of conjectures.
