Gas prices doubled in the best interest of Reliance, Indian corporate exclusive economy stripped naked.What to do?

Gas prices doubled in the best interest of Reliance, Indian corporate exclusive economy stripped naked.What to do?

It is a very difficult to call where the rupee will stabilise! The finance minister P Chidambaram rushed Washington to lead the rescue campaign as dollar linked Indian economy crashes with FED chief Bernanke`s initiatives resulting the revival of US economy inflicted by recession.

Palash Biswas

Email:palashbiswaskl@gmail.com

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"Its certainly is a good time for Reliance. The gas price hike which has been announced is going to be a big positive for Reliance Industries."

It is the general opinion.

Gas prices doubled in the best interest of Reliance, Indian corporate exclusive economy stripped naked.The government last month took the unpopular step of raising prices after a gap of three years, linking domestic gas prices with global liquefied natural gas (LNG) benchmarks.The Rangarajan formula for pricing will apply to all forms of natural gas - conventional, shale gas and coal-bed methane (CBM), and would apply from April 1, 2014.The  oil ministry said as per the Rangarajan formula, the price for natural gas in April-June 2013 comes to $6.83 per mmBtu. It however did not indicate the price of gas in April next year.

Market has been very volatile. so what? Reliance Industries will get USD 8.4 price for the natural gas from its eastern offshore KG-D6 fields from April 1, 2014 and potentially higher rates in following quarters, its minority partner Niko Resources said.

"Niko Resources confirms that the Cabinet Committee of Economic Affairs (CCEA) of the Government of India has (on June 27) approved a new pricing formula for domestic gas sales in India.

So what?A week after doubling of natural gas prices were approved, the Oil Ministry on Friday rebutted charges of the move resulting in windfall gains to Reliance Industries (RIL), saying new gas production from the company's fields will not start before 2017-18.

You have  to bear with because it is pure corporate raj.

Taxpayers have not to be obliged as they are expected to be in an open market economy in developed nations.

We, the  biometric digital citizens of India are as muted as our brothers and sisters belonging to excluded communities.

Democracy is reduced to farce as policy making is totally subjected to corporate lobbying.

The media hyped hue and cry about coalgate scam is not echoed in reliance case as the corporate funded Indian politics dares not to go beyond corporate interest.Meanwhile, industry body CII in a statement said it was "in favour of dollar based gas pricing and the CCEA's recent decision to increase the gas prices will not only incentivise investment in exploration and production, but will also result in increased revenues to the government which could then be invested in various development programmes.

It is a very difficult to call where the rupee will stabilise!  The finance minister P Chidambaram rushed Washington to lead the rescue campaign as dollar linked Indian economy crashes with FED chief Bernanke`s initiatives resulting the revival of US economy inflicted by recession. It is very difficult to estimate that how long the uncertainty or the volatility in Indian market will remain. It is very difficult to ascertain how much of the carry trade is still there to unwind before we can see some semblance of stabilities.It is the main concern of the Finance minister. He is not concerned with any public interest at all.On the other hand ,he is killing public interest quite single handedly. He is also killing the open market economy as well violating fiscal norms.

It happened again as it happened in earlier cases of recession, the investors opt for safe heaven and India loses much needed confidence of foreign investors to sustain the bottomless economy without any vital statics.

US media is concerned about US interest in India as vote bank politics exposes reformist skin inflicted by food security ordinance.

The growth story is based on free flow of capital and all the schemes are funded by foreign loan, mainly from world bank and IMF on very high interest rates.

Without any distribution system existing, the food security plan is projected as game changer for the ruling alliance while US economists push hard for second generation reforms.

The finance minister killed Coal India monopoly creating coal regulator only to help private electricity companies.

It is greater scam than coal gate and we failed to notice that with abundant coal in India, with expertise on mines development and coal production Coal India had to play vital role in energy sector. The finance minister killed coal India amidst threatened all India strike by coal unions only to allow indiscriminate import with falling rupee.

It means steep hike in prices of coal and electricity.

Further, the FM ensured multiplied profit for reliance only to hike oil and gas prices. It means all round inflation. However,the Finance Ministry has asked the Oil Ministry to examine issues raised by New Delhi's new pricing policy, which could significantly increase prices of local gas from April 2014.

One third is selected for food security without any transeparency with sensitive stakes on fiscal deficit and balance of payment crisis. While the definitions and statics are subjected to policy making opportunities. Redefined again and again.

The two third population, most of which happen to be jobless and equally deprived of purchasing power, driven out of market have to buy food in open market and it is the trickling economy.

Riches get more rich and the rest have to succumb in starvation. Parliament is by passed again and again and the minority government which ethically lost the mandate, pass anti people lawas one after another, one scam is followed by another, the entire political class is involved in a national game like IPL mixing fixing and sexing!

What to do?

"The pricing formula is based on the average of the prices of imported liquefied natural gas (LNG) into India and the weighted average of gas prices in North America, Europe and Japan," the Canadian firm said in a press statement.

The pricing formula will be effective on April 1, 2014 for a period of five years, with the price to be revised quarterly using the approved formula.

The price for each quarter will be calculated based on the 12-month trailing average price with a lag of one quarter (i.e. price for April to June 2014 will be calculated based on the averages for the 12 months ended December 31, 2013).

"Using the approved price formula, the price effective for April 1, 2014 is estimated at around USD 8.40 per million British thermal unit, double the price of USD 4.20 for current gas sales from the D6 Block," Niko said.

This price was also indicated in the Annexure that the Oil Ministry attached to the main Cabinet note on pricing of domestic gas as per a formula suggested by the Rangarajan panel.

On page 88 of the Annexure-1, the Ministry stated that the gas price based on the Petronet LNG Ltd's long-term contracts with RasGas of Qatar would come to USD 8.42 per mmBtu.

CCEA has approved inclusion of only price of only long- term LNG imports into India and has left out spot rates.

Petronet has also contracted long-term LNG from Gorgon project in Australia at higher price than RasGas and its inclusion in the formula from 2015-16 would further push up domestic rates.

"The pricing terms of the Petronet contracts are expected to result in further increases in the gas prices in future quarters, assuming current pricing levels of Japanese Crude Cocktail, US Henry Hub, UK National Balancing Point and Japan LNG imports," Niko said.

RIL is the operator of the KG-D6 block with 60 per cent stake while Niko holds 10 per cent interest. UK's BP plc has the remaining 30 per cent.

However, in a letter to the Oil Ministry, which has been seen by Reuters, the finance ministry has listed the concerns flagged by various newspaper editorials for "appropriate" action.

Newspapers have raised several issues including capping the gas price and ensuring Reliance delivers any shortfall it owes to customers at the old price of $4.2 per million British thermal units.

"It cannot be that gas producers will reap unlimited gains in the case of an upswing in global prices; any upside has to be capped," the finance ministry said in the letter, quoting a newspaper editorial.

Gas output from Reliance-operated D6 block has shrunk sharply, never having reached the forecast peak flow of 81 million cubic metres a day. In November Reliance cut its estimate of gas reserves in the block by about two thirds to 3.4 trillion cubic feet.

However the officials at the finance ministry said the letter was not aimed at suggesting a review of last month's cabinet decision on gas pricing.

"It is more like a fact-finding exercise," a senior Finance Ministry official with direct knowledge of the matter told Reuters.

"It is likely that nothing will come out of this exercise. But we want to ensure that everything has been examined," the official said.

An Oil Ministry official said, "The decision on gas pricing has been taken by the cabinet and there is no proposal for rethinking."