Narendra Taneja, South Asia Bureau Chief, Upstream, says the CCEA decision to all ow RIL to hike antural gas price is good but at the same time unfortunate because it is accompanied with riders because that shows you don’t trust the company or there is a huge trust deficit, which basically is more to do with the differences between various ministries.
It is more important for the government to create an eco-system in the country wherein companies can come and invest and where the companies are given the freedom to concentrate more on exploration, production of gas and not spend their energy on dealing with issue of arbitration or the bank guarantees etc.
The Cabinet today decided to allow Reliance Industries to almost double the price of natural gas from April provided the firm gave a bank guarantee to cover its liability if gas-hoarding charges are proved.
Excerpts of his interview on CNBC-TV18
Q: This has been an issue that has been going back and forth for so long. Finally it seems like we may be able to move forward?
A: It is good news but at the same time it is unfortunate. When our dependence on imported gas is growing what the government needs to do is to create a kind of environment, an eco-system in the country so that companies can come and invest and companies are given the freedom to concentrate more on exploration, production of gas and not basically compel to spend more than 50 percent of their energy on just dealing with New Delhi – all kind of issues arbitration or the bank guarantees and all that.
Have you seen this kind of thing in any other country in the world, I haven’t.
So, I am really surprised. The message you are trying to convey is you don’t trust the company or there is a huge trust deficit and that is more to do with the differences between various ministries particularly the ministry of finance and ministry of petroleum and natural gas. I find it a bit unfortunate.
Q: Do you believe that this business of capping prices of gas, the finance ministry has vociferously on three separate occasions made the case for capping of gas prices as far as user industries are concerned. They haven’t quantified what that should be. Do you believe as we head towards a more free market economy or more free market price regime that we are actually going to see the government bite the bullet and actually cap prices of gas for user industries?
A: If eventually the policy of the government and these decisions create a new kind of environment so that companies can get what funds they deserve, and they basically are given incentive to produce more, I think then it is good but I would like to wait for further details.
Having said that, it is important that explorer and producers are granted right kind of environment, right kind of climate and right kind of incentives.
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