This is with reference to the controversy surrounding
the pricing of KG-6 gas of Reliance , which started with $ 2.4 , is currently $
4.2 and slated to rise to $ 8.4 / unit , from April 2014
Writing in yesterday's Times of India , ( Swaminomics )
, eminent economist , Swaminathan Anklesaria Aiyar , made following points :
> Reliance (
KG - 6 ) accounts for only 10 % of the gas production in our
country .
Balance 90 % is by Public Sector Companies such as ONGC etc
> Hence ,
any increase in selling price will mostly benefit government itself
( Any idea ,
what will government do with this windfall
? )
> Price - hike envisaged is recommended by a
committee headed by Mr C
Rangrajan ( - implying ,
infallible / sacrosanct ? )
> By
introducing price control on gas , " India's name is mud globally , and
top
exploration companies now avoid India "
> An
economic rule of thumb is that " traded Commodities " should be
priced on
par with the import price ( my question : irrespective of the
actual cost
of production in India ? )
The
Rangrajan price of $ 8 / unit , is well below the import price
Not being an economist , I am confused !
May be Mr Aiyar can dispel my following doubts :
# By taking out
of our own soil ( or sea ) , does gas become a " traded
commodity
" ? - even if entirely sold in
India ?
# Is KG-6 gas a " Natural Resource "
which belongs to the Nation - and
not to
Reliance ?
# Is Reliance
the " Owner " of the gas or a mere " Contractor " ?
# Would Mr Aiyar
, want the Central Government to extend the same logic
to other
" Natural Resources " ( belonging to the country ) , being dug
out from
the earth ( by private companies ) , such as :
* Oil / Coal / Shale Gas etc ( Fossil
Fuels )
* Ores of Iron / Copper / Zinc / Aluminum etc
* Trees ( timber ) that grow in our jungles
* Any number of minor minerals / chemicals
Should
these too , be treated as " Traded Commodities " , whose local
selling
prices must be same as Imported prices ?
# What about
the air / wind that blows freely over our land
?
Does it
belong to the Nation or not ?
Or , does
it belong to the Companies setting up WIND
FARMS , to
generate
electricity ?
Should such
power be " Price Controlled " or not
?
# What about
the Sunlight that falls on our vast land
?
Who does it
belong to ? To our government or to the
companies setting
up mega
Solar Power Projects ?
Should there
be a price control on such power - produced , using a National Resource ?
# What about
the hydro - power generated by private sector companies
from the
water flowing in our Country's rivers ?
Does - or
does not - that water belong to the Nation
?
Should not
such power be price - controlled ?
# Tomorrow , if
a private sector company ( or a consortium of Indian
Companies ,
in joint venture with foreign companies ) , invest Rs 1 Lakh
Crores , to
build the 22 Km long Kalpsar Dam across the Bay of Cambay
in Gujarat
, and generate 10,000 MW of power from Oceanic Tides , -
can they be
allowed to set any selling price ? At International price ?
I suppose ,
it would be next to impossible for them to " Export " such
power beyond
the shores of India !
# Incidentally
, what about the Airwaves ( the 2G / 3G Spectrum ) ?
Is that also
a Natural Resource which belongs to the Nation ?
Having
" licensed " it from the Central Government , can Mobile
Phone
companies , set any selling prices for their services ?
Even with a combined debt of around Rs 2 Lakh Crores ,
how are these
Mobile
companies , able to deliver ( nearly ? ) cheapest mobile phone
services in
the entire World ? May be at 10 % of international price ?
# In ALL of the
above - mentioned cases , should Central Government
carefully
calculate / frequently audit , the " Cost of Production " ? Then
link the
" Local / Domestic , Selling Prices " to such " Cost of Production "
allowing certain pre-determined " Return on Investment
" ?
# Even as we
agree that " Export prices " of gas are governed by prevailing
international
prices , how come the " Domestic Prices " of gas are vastly
different in
different countries , ranging from under $ 1 to $ 5 / unit ?
Does this
itself , not prove that , in each country , domestic prices are
linked to
their own local " Cost of Production " ?
# Very often ,
have we not exported , food grains , at " Below the Cost " ?
Mr AIYAR ,
You will be doing a great service to millions of
ignoramus like me , by offering your own " Views " on the points raised
above
And , I suppose , since the fall in production from KG
- 6 , is purely and entirely , due to " Technically Sound " reasons ,
raising of the selling price to
$ 8 ( or even $ 16 / - ! ) , won't result in any
increase in production !
Time alone will tell
!
* hemen parekh
( 17 Feb
2014 / Mumbai
)
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