Gas price hike will bring new investment in economy: Taneja

Energy Expert, Narendra Taneja welcomed the government's decision to hike natural gas price to USD 8.4 per mmbtu from April 1, 2014 and said the move will bring lot of the new investment in the oil and gas sector of the economy.

"From the energy security point of view you will see a lot of investment now coming into the gas sector. Indian private sector companies could start investing more not only in upstream but also midstream and downstream in terms of building gas evacuation pipeline, infrastructure etc," Taneja said.
He said the move will lead to a gas revolution in the country and will encourage global majors like BP to invest more in the country. Below is the verbatim transcript of his interview Q: Gas prices to rise to USD 8.4 per mmbtu from the April 1 2014 that is the news flash that is just come in, that is the big surprise. The oil ministries formula, the proposal was USD 6.78 per mmbtu. There was consensus between the finance ministry and the oil ministry on USD 6.78 per mmbtu. Of course the most liberal interpretation was the planning commission at USD 10 per mmbtu, power wanted USD 5 per mmbtu and nothing more than that and fertiliser didn’t want a hike at all. If this flash is correct, gas prices to rise to USD 8.4 per mmbtu from April 1 2014, very quickly your reaction?
A: It is a positive development. That would basically attract more investment. Q: Are you not surprised by this decision?
A: I am little surprised but to be honest we had been kind of gathering these reports and that was one of the reasons the decision was basically postponed in the last meeting. Moily disappeared from New Delhi to some other place. However, it has been building up because the message is very clear, we have to incentivise, there is no other way. We have seen what has happened to the coal sector now the future, the silver lining is the gas sector. Government needs to manage, regulate and encourage this sector very carefully otherwise gas sector could go the same way as the coal sector. So, I think its very positive development. Q: The other details, there will be a quarterly revision and not a monthly revision with effect from April 1 2014 which also means that USD 8.4 per mmbtu is not sacrosanct USD 8.4 per mmbtu could move up and could go all the way to about USD 12 per mmbtu as well by 2016?
A: It could be USD 12 per mmbtu and it can also go down. The market forces and the demand supply fundamentals of the overall sentiment basically take the lead because that is how industry is going to work in this country. As I said looking at it from the energy security point of view you will see a lot of investment now coming into the gas sector. You will see shale moving into India big time, just wait for few months and BP is going to kind of invest even more in the gas sector in the country. Indian private sector companies could start more not only in upstream but also midstream and downstream in terms of building gas evacuation pipeline, infrastructure etc. So, this is going to basically lead to some kind of a gas revolution in the country and that is needed.
This is will also put pressure on the coal sector and government will have to do something in terms of the coal sector, for instance partial privatisation of Coal India and similar other steps. So, I think it is very good news from the energy security viewpoint and we must welcome it. Those who are basically opposing just because cent here and a cent there, we should not waste the time on that. They should look at the big picture and they should look at it as a positive move in terms of energy security for the country.