Sep 3, 2013

Letter to PM Man Mohan Singh : Against hike of Natural Gas Price which will affect Power cost

Dated : 02.09.2013 :  Dr. Man Mohan Singh

Prime Minister

Govt. of India


Sub : Against hike of Natural Gas Price which will affect Power cost.

Respected Sir,

You are kindly aware that cabinet committee on Economic affairs has increased the purchasing price of natural gas to $8.2 mmBtu. Increase of purchasing price of natural gas will have adverse affect on Power Cost generated from natural gas. In this reference All India Power Engineers Federation (AIPEF) wants to draw your kind attention as following demanding roll back of gas price hike in larger interest of common man.

Four weeks ago Petroleum Ministry submitted to the standing committee on Finance that cost of production from the KG Basin was a mere $2.74 mm Btu.
Despite such a low cost of production cabinet committee on economic affairs increased the purchasing price of gas to $8.2 mm Btu which is very high.
Such a huge hike is creating a situation where Reliance Industries Ltd. (RIL) will gain a very huge profit. Therefore it is clear that the price hike is aimed at providing a huge benefit to a corporate giant.

The cost of production of RIL in KG – D6 Block in 2011-12 was $2.48 mm Btu excluding levies and $2.74 mm Btu including levies. At present the purchase price of domestically produced natural gas is $4.2 mm Btu which has been doubled to $8.2 mm Btu.

Apart from the economic down turn, the country is going through an acute power shortage due to non supply of mandated natural gas from KG Basin. As many as 12 power plants are lying idle and 19 power plants are affected by non supply of gas from KG Basin. All these 31  plants across the country were expected to collectively produce 15000 MW power.

The supply of KG D – 6 gas to power sector is zero since March’2013. As per Petroleum Ministries estimates KG Basin is falling short by whopping 80% of it’s mandated gas production. However GOI has not penalized RIL which is expected to pay 3 billion dollars as penalty on this account.

2. Sir! You would kindly agree that under circumstances as explained above it is not fair to double the natural gas price. It is also worthwhile to mention that increase shall be effected from 01-04-2014, the date by which time elections for new Lok Sabha will be in process. Therefore neither it is fair nor it is moral to hike the gas price which is already affection power production of about 15000 MW and which is bound to hike the power generation cost, burden of which will be transferred to common man.

3. Therefore it is kindly requested that you may kindly use your good offices and intervene to revisit the exorbitant pricing of natural gas affecting power generation and it’s cost.

Thanking you with regards.

Yours faithfully

Shailendra Dubey

Secretary General

Copy to  :

Mrs. Sushma Swaraj, Leader of opposition, Lok Sabha, New Delhi.
Mr. Arun Jaitly, Leader of opposition, Rajya Sabha, New Delhi.

CC :

Petroleum Minister, GOI, New Delhi.
Power Minister, GOI, New Delhi.
State Power Minister, GOI, New Delhi
Power Secretary, GOI, New Delhi.

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